Treasury to recoup cash via Lloyds share placing

LLOYDS Banking Group will effectively pay the Treasury back &pound;2.3bn of the state aid it has received today, making it the first government-recapitalised British bank to repay part of its loan.<br /><br />The taxpayer will recoup the money as part of Lloyds &pound;4bn share placing, aimed at repaying the &pound;4bn in preference shares it issued to the Treasury. This makes the UK government the first in the world to retrieve cash used to stop banking collapse.<br /><br />The government, which owns more than 43 per cent of Lloyds, has promised to take up its full allocation of new equity, equating to &pound;1.7bn, meaning that the remaining &pound;2.3bn will be raised from other investors and directed back into the Treasury&rsquo;s coffers.<br /><br />That will only happen if investors take up all the new shares, but there should be a good appetite. The new shares are priced at 38.43p, a 58 per cent discount on Friday&rsquo;s closing price of 66.2p.<br /><br />But with Lloyds&rsquo; stock still languishing far below the 115p per share price at which the Treasury bought its stake &ndash; managed by UK Financial Investments &ndash; the taxpayer is still facing a paper loss of around &pound;3.5bn on its ordinary equity.