Lloyds gets UKFI backing

The British government body charged with overseeing State-owned bank stakes today threw its weight behind Lloyds Banking Group ahead of its annual meeting later this week.

UK Financial Investments – which looks after the government’s 43.4% shareholding in Lloyds – said it would vote in favour of all resolutions put to investors at Friday’s meeting in Glasgow.

John Kingman, chief executive of UKFI, said: “UKFI has made it clear that we fully support the Lloyds board, strategy and executive team led by Eric Daniels.”

But Lloyds may not get such a warm reception from its 2.8 million-strong army of smaller investors at the AGM.

While the bank appeased shareholders recently with news that chairman Victor Blank will step down next summer, shareholders are still expected to vent their fury.

There has been growing discontent at the group’s decision to takeover ailing rival HBOS in last autumn’s dramatic rescue deal.

And shareholders may still protest at the deal when voting on Blank’s reappointment for the period leading up to his departure.

Institutional investment advisory firm Pirc also said today that it had concerns over Blank’s competency in the wake of the HBOS deal, which was seen as having gone through without the proper due diligence.

The group welcomed his move to step down, saying it “agreed with Blank’s action in taking responsibility”, but also urged the bank to put all its directors up for re-election at next year’s AGM.

Friday’s meeting will also see shareholders asked to vote on the company’s plans to raise £4bn (€4.6bn) through a share placing to convert the preference shares owned by the government into ordinary shares.

The taxpayer currently owns 43.4% of the bank, but if all other shareholders snub the issue, it could end up owning 65%.

This is seen as being unlikely, however, as the shares are being offered at 38.43p – a significant discount to the current share price.