Lloyds mulls £11-billion rights issue

British banking and insurance major, Lloyds Banking Group Plc (Lloyds) is planning to raise £11 billion ($17.4) through a rights issue, after securing the support from a powerful syndicate of investment bankers, in an effort to back out of the government's Asset Protection Scheme (APS).

UBS and Bank of America Merrill Lynch are believed to act as lead underwriters for the issue, while Citigroup, Goldman Sachs, JP Morgan Cazenove and HSBC would act as joint underwriters, Sunday Times reported.

Observers expect that the rights issue would be launched in two weeks.

UK's Financial Services Authority (FSA) and Bank of England are in talks whether they should allow the banker to back out of the APS. The APS would have shielded the bank from potential recessionary impacts, following the global credit crisis.

London-based Lloyds Banking Group is a large financial institution formed after the merger of Lloyds TSB and HBOS in January 2009. (See: Lloyds takes over HBOS in $21.7 billion deal with British PM Brown's support)

The group's main brands are Lloyds TSB, Halifax and Bank of Scotland, serving its clients through four business divisions: retail banking including mortgages, wholesale banking, insurance & wealth and international divisions. The bank's operations are spread over US, Europe, Middle East and Asia. The UK government holds 43.4 per cent stake in Lloyds.