* Investors agree to sell bonds worth nominal 58.5 mln stg
* Offer had been criticised by activist investor
* Pays between 104 and 144 percent of nominal value (Adds details, background)
LONDON, April 17 (Reuters) - Lloyds Banking Group said on Thursday that private retail investors holding 58.5million pounds worth of the enhanced capital note (ECN) bondswhich were issued to help rescue the bank during the financialcrisis had accepted its offer to buy them back.
Lloyds, 25 percent-owned by the government, issued thebonds, which were designed to boost the bank's capital if it raninto trouble, in 2009. But new UK and European capital rules inforce this year mean the bonds may no longer count as corecapital to cushion the bank if it runs into financial problems.
Private retail investors were given the chance to sell theirholdings for cash at the market price. The bank said bonds wortha total nominal amount of 58.5 million pounds had been acceptedfor purchase in a tender offer at prices ranging between 104percent and 144 percent of their nominal value.
Banking industry sources said less than 10,000 privateretail investors held the bonds.
Lloyds said earlier in April that institutional investorshad agreed to exchange 5 billion pounds worth of the ECNs fornew bonds worth around 5.35 billion pounds.
The bank surprised some investors in February when it saidit could buy back the ECNs at face value although analysts didnot expect it to offer the bare minimum as upsetting bondholdersincluding hedge funds and other big investors could provedamaging for future fundraisings.
The bank's treatment of retail investors had been criticisedby Mark Taber, who led successful campaigns for retailbondholders in Bank of Ireland and the Co-operativeBank.
Taber had said that if Lloyds believed there was an issuewith the capital status of the ECNs it should have engaged withall shareholders, including private investors, to find asolution.
Shares in Lloyds were up 0.17 percent at 72.98 pence by 0721GMT. ($1=0.5955 pounds) (Reporting by Matt Scuffham; Editing by Brenda Goh and GregMahlich)
Lloyds (LLOY)