Government to take 43.4% stake in Lloyds Banking Group

by Gill Montia

Story link: Government to take 43.4% stake in Lloyds Banking Group

Lloyds Banking Group, which is being formed from the merger of Lloyds TSB and HBOS, will be 43.4% owned by the Government.

Both banks have offered new shares to existing investors prior to the merger and in the case of Lloyds TSB the take-up was a mere 0.5% despite all directors assuming their entitlements.

Troubled HBOS put up an even poorer showing with 0.24% the its share issue subscribed.

The outcome was no surprise as the new shares were offered at prices above current trading levels.

The fundraisings have been underwritten by the Government, leaving the taxpayer with a major stake in the new banking group.

The merger, which has been sanctioned despite competition issues, is scheduled for completion next week and shares in Lloyds Banking Group should begin trading from 19th January.

The HBOS brand will be retained and the new group, which will have around 3,000 branches, will control 25% of UK personal bank accounts and around 28% of the mortgage market.