Page last updated at 17:08 GMT, Monday, 18 May 2009 18:08 UK

Lloyds shares rise on Blank news

Lloyds chairman Sir Victor Blank
Sir Victor said it was "the right time" to appoint a new chairman

Shares in Lloyds Banking Group have risen following chairman Sir Victor Blank's announcement he would be stepping down by June next year.

Lloyds shares closed 9.9%, or 8.8 pence, higher at 98p.

Sir Victor has been chairman of Lloyds since 2006 but has faced criticism for the decision to buy HBOS last year.

Separately, Lloyds said investors would be able to buy up to £4bn of shares from 20 May to replace preference shares held by the Treasury.

SHARE DIFFERENCES
Ordinary shares: Give you voting rights at general meetings, and pay a variable dividend depending on profits
Preference shares: Give you no voting rights, but pay a fixed dividend irrespective of profits

Lloyds announced the cash-raising plan in March.

The share offer is underwritten by the Treasury so if shareholders do not take up any shares, they will be bought by the Treasury.

That would increase the stake in the bank owned by UK taxpayers from 43% to about 65%.

HBOS criticism

Sir Victor announced on Sunday that he would retire next year, saying it was "the right time for the Group to appoint a new chairman".

Lloyds' takeover of HBOS was approved by a court in Edinburgh in January, with the government waiving competition concerns.

At the time, Lloyds chief executive Eric Daniels said the combined group would have "a strong financial position".

But in February Lloyds said that HBOS had made a loss of £10.8bn in 2008.

There will come a moment when [Lloyds] has absorbed all the losses generated by imprudent loans and investments made in the bubble years [at HBOS]
Robert Peston, BBC business editor

Sir Victor and Mr Daniels have both come under fire for taking on HBOS.

"He is certainly culpable for what's happened at Lloyds but he's by no means individually or solely responsible for what's taken place at the merged group," Euan Stirling, investment director at Standard Life Investments, told the BBC.

Standard Life Investments is an institutional shareholder in Lloyds Banking Group.

"[Lloyds] did take on a very, very risky loan book in HBOS. I think this is going to turn out to be the worst loan portfolio in the history of UK banking," Mr Stirling added.

However the BBC's business editor Robert Peston says at some point Lloyds will have absorbed all of HBOS's losses and will be "a gargantuan collector of our earnings and savings".

The decision to buy HBOS therefore may not look so bad in two or three years, he says.

Discount shares

Lloyds has 2.8m private investors.

They are being offered 0.6213 shares at 38.43 pence for each share owned.

That is a discount of 56.9% on Friday's closing price of 89.2p.

Lloyds said the average private shareholder has about 550 shares. They would be able to buy 340 new shares for £130.

Previous attempts by banks to raise cash via share offers have been snubbed by investors because the offer price has been above the market value.

Last year RBS sought to raise £12bn, but only 0.24% of the new shares on offer were taken up by shareholders.

The offer price of 65.5p was about 10p higher than the price at which the shares were trading.



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FROM OTHER NEWS SITES
The ScotsmanScottish Business Briefing - Tuesday May 19, 2009 - 25 hrs ago
Reuters PRESS DIGEST - British business - May 19 - 29 hrs ago
Ireland On-Line Lloyds begin hunt for new chairman - 29 hrs ago
Tehran Times Lloyds Bank chairman to step down - 37 hrs ago
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