Lloyds launches world's largest ever rights issue

This morning Lloyds Banking Group announced that it will be offering its shareholders a 59.5% discount on its shares in a bid to raise £13.5bn in fresh capital. Commenting on the offer and whether shareholders should take up the rights issue, Nick Raynor, investment adviser at The Share Centre, said: "Lloyds' shareholders are being offered 1.34 new Lloyds shares for each one they already own. A total of 36.5bn new shares will be issued at the discounted price of 37p each. The rights issue is the second in the final stage of a total £22.5bn fund raising exercise designed to avoid taking part in the Government's Asset Protection Scheme.

"Despite the 59.5% discount there is no quick profit to be made. Shareholders should consider taking up the offer of 37p if they can afford it, to avoid the risk of having their holdings significantly diluted. The 36.5bn shares being created will take up 57.3% of Lloyds' enlarged share capital.

"However, if shareholders cannot afford the rights issue then we advise them to sell the shares and buy back after Friday 27 November.  This way they can avoid subscribing to the rights issues' terms and be fully aware of their exposure to the company. Shareholders will vote on the plan on Thursday and have until early December to decide whether to take up their rights."