This must have been a question Lloyds Banking Group's customers were asking themselves this morning with the announcement that Lloyds agreed to pay at least $3.6 billion over 15 years to raise $2 billion in capital.
According to Bloomberg, the bank sold hybrid Tier 1 securities on Dec. 15 that cost 12 percent, or $240 million a year in interest, until 2024. That’s a higher interest rate than bicycle-rack maker TriMas Corp. paid to sell senior notes, which Moody’s Investors Service rates Caa1, seven steps below investment grade.
Moody’s defines securities rated in the Caa category as being “of poor standing and subject to very high credit risk.”
No wonder when I've been asking banks recently the question "On which aspect of lending are you currently focusing?" I've received the response "Getting it back!"
Steven Petty, Commercial Property Solicitor
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