Lloyds gets support for a cash call

LLOYDS Banking Group executives believe they have secured sufficient appetite from investors for a share placing that would allow the bank to reduce its participation in the government&rsquo;s costly Asset Protection Scheme (APS), City A.M. can reveal.<br /><br />The bank has been sounding out selected investors over the past few weeks and has received assurances that it could successfully bolster its capital base with a placing, reducing reliance on the APS, sources familiar with the bank&rsquo;s range of options said.<br /><br />The source said the APS was highly unlikely to close on the original terms, adding that a range of options were under discussion, including paying for the scheme entirely in cash and exiting altogether.<br /><br />Chief executive Eric Daniels is keen to see that the government&rsquo;s stake does not rise above 50 per cent from its current level of 42 per cent, a barrier that would certainly be breached under the current terms.<br /><br />The existing agreement would see Lloyds insure &pound;260bn worth of assets, in return for &lsquo;B&rsquo; shares worth &pound;15.6bn, raising the taxpayer&rsquo;s stake in the bank to around 62 per cent.<br /><br />Analysts, including Credit Suisse&rsquo;s Jonathan Pierce, believe a cash call of around &pound;6bn would allow the bank to halve its use of the APS, ahead of the arrival of former Citigroup chair Sir Win Bischoff&rsquo;s as chairman on 15 September.