Lloyds to pay back £2.3bn

Jun 9 2009 by Iain Laing, The Journal

LLOYDS Banking Group is set to pay back £2.3bn to the taxpayer after strong backing for its £4bn fundraising.

The bank is the first to return part of the emergency funds pumped in by the Government at the height of the financial crisis last autumn.

It has raised the £4bn to buy back the special Treasury preference shares issued to prop up its balance sheet.

The Government currently owns 43.4% of the bank and bought £1.7bn in normal shares under the offer, but Lloyds has also raised £2.3bn from other investors to pay off the preference shares.

Lloyds said 87% of shares were taken up by existing investors, with the remainder sold in the market.

The profit from the sale of the left-over shares will be split among those shareholders who did not take part – meaning the average investor with 550 shares will receive a cheque for £73. The Government’s stake remains unchanged.

Freeing itself of the preference shares relieves an important burden for Lloyds because they cost it £480m in payments every year.