socialmedian: Lloyds rights issue looks distinctly unattractive

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Lloyds rights issue looks distinctly unattractive

Source: The Guardian

Nov 07, 2009

Summary

Small investors will probably be right to view participation in the bank's cash call as throwing good money after bad

If you're one of Lloyds/Halifax's three million shareholders, you probably received a weighty rights issue document this week. It boils down to this: "You got some Halifax shares when it floated. Now we at Lloyds want you to cough up a couple of hundred quid (we won't tell you the exact sum till later) to keep us afloat and avoid the hideously expensive government protection scheme."

So, should you pay up? The bankruptcy risk that hung over the sector has all but evaporated. Armageddon has gone away. Shares in Lloyds are up 180% since March. On Tuesday, the EU told the bank that in return for state aid, it must sell off C&G and Intelligent Finance. But when it became clear that it could hold on to Halifax's profitable mortgage business, shares in Lloyds motored upwards again.

The capital raising is massive – a total of £21bn, compared with Lloyds's total market value of £24bn. The City likes it. Lloyds has achieved the extraordinary trick of gett

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