LONDON (Alliance News) - Lloyds Banking Group PLC Tuesday said it has won permission from Bank of England regulators to redeem some of the enhanced capital notes issued to provide it with an important source of capital during the financial crisis, but has postponed the action to a later time.
About GBP3.3 billion of the notes were left outstanding after GBP5.0 billion of the notes originally issued in 2009 and 2010 were exchanged into additional tier 1 securities and cash in March and April of 2014. The GBP8.3 billion of enhanced capital notes were issued in 2009, when the banking group also required a GBP20 billion bailout from the UK government in the wake of its acquisition of HBOS.
The outstanding notes carry coupons ranging from as low as 6.4390% to as high as 16.1250% in an interest rate environment in which central banks have set rates at historic lows or even in negative territory. Some of the outstanding notes are due to mature as late as 2032.
In a statement, Lloyds said that permission was given by the Bank of England's Prudential Regulation Authority over the redemption of the enhanced capital notes.
"The group has also been notified by BNY Mellon Corporate Trustee Services Ltd, the trustee in respect of the ECNs, that it will seek a declaratory judgment (following an instruction from certain bondholders), in respect of the interpretation of certain terms of the ECNs. The group will work with the trustee to seek an expedited process and, on the basis of such, has decided to defer exercising the redemption of these ECNs for the time-being," Lloyds said.
Lloyds shares were up 0.3% at 79.62 pence on Tuesday morning.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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Lloyds (LLOY)