Lloyds raises £170m through new share issue

Part-nationalised bank Lloyds has raised £170m through a new share issue to raise capital.

Lloyds, which is partly owned by the British government after a state bailout in 2008, said it had issued 479.3m new shares at a subscription price of 35.47 pence per share.

The company said at the time of its annual results last month that it planned to restart coupon payments on certain hybrid capital securities this year, and estimated that these payments would amount to some £170m.

Lloyds said the share issue would have a neutral effect on its capital position, and analysts said the move had been expected given its intention to restart those coupon payments.

Lloyds' share issue also comes after the bank drew down £11.4bn from the European Central Bank's second offering of cheap three-year funds last month. The bank has a core Tier 1 capital ratio of 10.8 per cent.

Lloyds shares were up 0.6 per cent at 36.50 pence in early morning trade - still well below the average 63 pence price at which the British taxpayer acquired its stake in the bank.

Lloyds reported a £3.5bn loss for 2011 in February, with its earnings hurt by a £3.2bn hit to compensate customers for the mis-selling of payment protection insurance, which typically covers loan repayments if customers fall ill or lose their jobs.