Lloyds shareholders approve rights issue
Bank did not escape grilling by shareholders on error during crisis
Birmingham, England: Lloyds Banking Group investors on Thursday overwhelmingly approved the bank's record rights issue but gave executives a grilling for mistakes made during the financial crisis.
Lloyds also said at a meeting of shareholders that it had a "modest" exposure to Dubai World, a company at the centre of worries about debt problems in Dubai, but said it did not represent a material threat to the bank or shareholders. Lloyds and other European bank stocks were hit yesterday by investor concerns about loan exposure to Dubai.
Lloyds said 99.75 per cent of shareholders approved the rights issue in an unofficial tally announced at the meeting.
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 (Dh82.3 billion) to escape costly state support.
Lloyds Banking Group Chief Executive Eric Daniels reiterated yesterday that the acquisition of ailing mortgage lender HBOS will provide value to shareholders in the long term despite some "short-term pain."
The shareholder meeting comes 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.
"My feeling is we've got to go along with [the rights issue]," said Ralph Newnes, a shareholder from Birmingham. "If we remain in the government scheme, it is even worse."
Newnes said his support would come with mixed feelings. "With the press coverage they have had and with what they have said about secret loans, there are a lot of questions that need answering," he said.
Lloyds this month said it wanted 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.
"Crucially, with your approval and capital markets support [this opportunity] will allow us to shape our own future," Lloyds Chairman Win Bischoff told shareholders.
Approving the rights issue is a more attractive option that the government insurance scheme.
