Lloyds Banking Group Plc inched closer to plugging a capital gap of more than 20 billion pounds ($33 billion), boosting the British bank"s shares on prospects a deal could happen before the year end, according to Reuters. The country"s biggest retail bank said on Thursday it was looking to raise capital through a rights issue and a debt swap, for the first time confirming widely reported details of its plans to stay out of a government-backed asset insurance scheme. Lloyds said it was in advanced discussions with regulators, a sign it is getting more confident it can escape the asset protection scheme (APS), which could have triggered further European Union anti-trust sanctions. The bank is keen to announce its plans to raise capital at the same time as any sanctions it faces from the EU, after the UK scooped a stake of up 43 percent in the bank in last year"s emergency bailout, sources close to the situation have said. By 1309 GMT, Lloyds stock was up 8.6 percent at 86.81 pence, outperforming a 2.9 percent rise in the DJ Stoxx European banking sector index and rebounding from Wednesday"s lowest close in more than three months. Lloyds shares had lost ground this week as the market feared an order from Europe"s anti-trust regulators for Dutch bancassurer ING to break up its business after receiving state aid set a harsh precedent for the British bank. "I think the comments today provide comfort that the group will not be broken up and that any restructuring initiatives will not be particularly material to group earnings or capital," said Joe Dickerson, UK banks analyst at brokerage Execution. In reference to its talks with Brussels, the bank said: "(Lloyds) is confident that the final terms of its restructuring plan, including any required divestments of assets, will not have a material impact on the group." Its comments came as Ireland"s finance minister sought to downplay worries about a delay to his 54 billion euro bad bank plan, saying it could still proceed on schedule unless parliament gets bogged down in a lengthy debate.
