ANALYSIS-Big banks winners from new contingent capital move
By Jane Merriman
LONDON, Aug 27 (Reuters) – Plans to make hybrid bond investors share the pain when banks run into trouble could polarise the financial sector into big firms that can afford to pay up for capital and smaller players that cannot.
Financial regulators want to ensure that taxpayers are not the only ones on the hook when banks fail by proposing that bonds that count towards a bank’s capital should be written down or converted to equity if it is close to collapse.
Lloyds cash call moves focus to turnaround
By Clara Ferreira-Marques
LONDON, Dec 14 (Reuters) – Lloyds completed a record 13.5 billion pound ($21.9 billion) rights issue on Monday, ending a turbulent period for the bank and shifting investor focus to a potential government stake sale in 2010.
The discounted cash call — the world’s largest to date — is a key plank of a bumper capital raising effort worth over 23 billion pounds in total and aimed at helping Britain’s largest retail bank avoid a state-backed scheme for bad debts.
Lloyds Banking Group said on Monday 95.3 percent of the new shares offered were taken up by investors including the British government, which owns around 43 percent of the bank.
That left just over 600 million pounds of shares to be placed by the underwriters — Bank of America Merrill Lynch, UBS and Citigroup — far better than Lloyds’s 4 billion pound sale in June, which left a unwanted shares amounting to 13.1 percent.
The rump was sold within hours at 55.5 pence per share, an 18.5 pence premium to the rights issue price. The sale will raise some 18.4 pence per share for investors who did not take up their rights, an average of 180 pounds each, the bank said.
A high take-up — with the rump placed by 1000 GMT — was the strongest indication yet of shareholder support for Lloyds’s turnaround effort and of appetite for its shares.
Bankers, regulators eye next generation of CoCos
By Jane Merriman LONDON, Nov 20 (Reuters) – Investment bankers are already pitching to clients a new form of hybrid bond that financial regulators see as a potential saviour of troubled banks, but it is uncertain if they will work or if investors will buy them.The bonds, which convert to equity if a bank’s capital runs low, have been created for Lloyds as part of a 21 billion pound ($34.63 billion) capital raising to free the UK bank from a government insurance scheme for bad loans.
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