LONDON: State-backed Lloyds Banking Group said it would not need to issue new equity or specialist debt in order to meet capital demands set by Britain’s financial regulator.
The Bank of England said in March that Britain’s banks must raise £25bn ($38bn) of extra capital by the end of the year to absorb any future losses on loans and said the Prudential Regulation Authority (PRA) would give banks specific guidance on their capital position by the end of May.
Industry sources and analysts had identified Lloyds and part state-owned rival RBS as most likely to need extra capital. Lloyds was seen facing a shortfall of up to £5bn and RBS as much as three times that amount.
Lloyds said yesterday it had been informed of the outcome of the PRA’s considerations and expected to meet additional capital requirements by generating cash from its core business and through the disposal of non-core assets. Neither the bank nor the PRA said how much extra capital Lloyds needed.
RBS is expected to issue a statement later yesterday morning, sources said, followed by a statement on banks’ capital from the PRA. The tone of the RBS statement is expected to be “reassuring”, one of the sources said.
Lloyds’ capital strength is a key factor in the prospects for Britain starting to sell its 39 percent shareholding.
Hopes of a sale have intensified in recent days as shares in Lloyds passed the 61.2 pence level which the government regards as break-even following its £20.5bn bailout of the bank in 2008. It will also enable Lloyds to support the UK economy through lending to businesses and households.
“Our strong capital position enables the group to actively support growth and lending in the UK economy as well as delivering sustainable results for our shareholders,” said Lloyds Chief Executive Antonio Horta-Osorio.
Shares in Lloyds were up 1.6 percent at 0900 GMT, among the top FTSE-100 risers. RBS shares were up 0.3 percent, with Barclays up 0.2 percent and HSBC down 0.9 percent.
Reuters
