Lloyds Share Price: Bank exchanges $1.6 billion ECNs for AT1 securities

October 21, 2019

iNVEZZ.com Thursday, April 3: Lloyds Banking Group (LON:LLOY) said today in a regulatory filing to the London Stock Exchange that it is to exchange about $1.6 billion (₤963 million) of enhanced capital notes (ECNs) for $1.675 billion (₤1.01 billion) in new Additional Tier 1 (AT1) securities. The bank last month gave its institutional bondholders the opportunity to swap their ECNs for AT1 bonds, while offering cash to retail investors.

In March Lloyds had about ₤8.4 billion of outstanding ECNs, which were issued in 2009 and designed to convert into shares if the bank’s capital ratio dropped below certain benchmarks. The UK lender decided to buyback the ECNs, as they no longer serve as appropriate capital reserves under new regulations from the European Union. A Lloyds spokesperson said last month: “This offer provides greater choice for investors, including the option of getting cash for their investment at around market price. It also ensures that the group’s capital position is aligned with evolving regulatory requirements.”

Following the $1.675 billion issuance, Lloyds will have a total of ₤5.35 billion of AT1 securities outstanding. Settlements of the ECN-AT1 exchange are expected to take place next week. The bank also said that the offer to retail investors to sell their ECNs for cash will remain open until 16.00 BST on April 16.
**Osborne denies the government interfered in branch sale to Co-op.**

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Finance minister George Osborne told lawmakers today that his ministry didn’t interfere in the process of Lloyds’s planned sale of hundreds of branches to the Co-operative Bank. The Treasury Select Committee is carrying out an investigation into whether there was undue political pressure applied to the bank to sell the 631 branches to the Co-op.

“We were always very clear both that the commercial decision on the Verde sale [codename for the deal] was a matter for Lloyds and that the then-regulator the FSA should decide whether to allow the sale to proceed or not on prudential grounds … At no point, did the Treasury seek to interfere in those judgments,” Osborne said.
The deal collapsed in April last year and the Co-op Bank was later revealed to have a ₤1.5 billion capital shortfall. The bank had to seek recapitalisation, ultimately ceding control to its bondholders, including several hedge funds.

**Analysts on Lloyds**
Deutsche Bank reaffirmed its ‘buy’ rating on Lloyds’ shares in a note sent to investors today. It gave the stock a price target of 90.00p. Currently, five investment analysts rate Lloyds as a ‘sell’, seven give it a ‘hold’ rating and 22 are calling it a ‘buy’.
**As of 13.20 UTC buy Lloyds shares at 76.71p.**
**As of 13.20 UTC sell Lloyds shares at 76.69p.**