10th Dec 2015 10:36
LONDON (Alliance News) - Lloyds Banking Group PLC on Thursday won a key appeal that enables the lender to redeem expensive notes issued in 2009 in the wake of its GBP20.5 billion government bailout.
The bank, which is a member of the FTSE 100 index of London's biggest listed companies, now has the right, subject to conditions, to redeem any series of the so-called enhanced capital notes at par or, in relation to certain series, a make-whole price.
Lloyds welcomed the unanimous decision from the Court of Appeal, which found that a capital disqualification event took place. The appeal came after the High Court found in June that such an event had not taken place.
Failure to successfully appeal the court's ruling would have caused the bank to lose out on a benefit of about GBP200 million per annum over the next five years due to the high coupon on the securities, Lloyds said back in June.
Earlier this year, the bank had received permission from Bank of England regulators to redeem the enhanced capital notes issued to provide it with an important source of capital during the financial crisis. The enhanced capital notes were not taken into account under a stress test undertaken by the Bank of England's Prudential Regulation Authority in 2014, which the group believes was a capital disqualification event.
The bank has already stated which of the notes it wants to call, and said on Thursday it will "consider its options" over the remaining series of the notes.
"The group reserves its right to exercise the regulatory call right and redeem any or all series of ECNs at any time in accordance with the terms and conditions of each series of the ECNs," Lloyds said in a statement on Thursday.
Shares in Lloyds were up 0.9% at 71.30 pence on Thursday morning.
By Samuel Agini; [email protected]; @samuelagini
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