Investors in Britain's Lloyds are today expected to approve the bank's record rights issue but give executives a grilling for mistakes made during the financial crisis.
Lloyds, which has more investors than any other British company after its takeover of HBOS in January, is seeking approval to raise £13.5 billion pounds to escape costly state support, just two days after the Bank of England said it secretly lent HBOS and Royal Bank of Scotland almost £62 billion as the crisis raged last year.
Lloyds Banking Group said earlier this month it planned to sidestep a government-backed insurance scheme for toxic loans and would instead turn to investors to raise a total of £22.5 billion to repair a balance sheet badly depleted by the HBOS deal.
Britain's largest retail lender has already secured the backing of its largest shareholder -- the UK government with just over 43 per cent -- but could face anger from its legion of small shareholders, many of whom are expected to flock to Birmingham today.
Lloyds has 2.8 million small investors and many of those who gather at Birmingham's NEC arena, more frequently host to sporting and music events, will already have been tapped for cash in the past 18 months.
Lloyds asked shareholders for £4 billion earlier this year, and beleaguered HBOS scrambled together a separate £4 billion last year in one of the biggest fund-raising flops in UK corporate history.
In addition to the rights issue Lloyds is raising £9 billion from a debt exchange.
The rights issue was priced earlier this week at 37 pence per share, at the higher end of the expected range, with investors being offered £1.34 shares for every existing share held.
That price represents a 38.6 per cent discount to the theoretical ex-rights price -- a far steeper discount than that offered by peers including Societe Generale -- and compares to a current market price of around 94p.
Analysts say a positive vote today will remove a final cloud of uncertainty hanging over Lloyds after months of debate over EU competition authorities and toxic loans.
Reuters