Regulator Identifies £8.6bn Capital Shortfall at Lloyds


LONDON -- The shares of Lloyds Banking slid 0.2 pence to 61.6 pence during early trade this morning after the Prudential Regulatory Authority said it had identified a £8.6 billion capital shortfall at the bank.

The PRA, which was established this year to regulate the bank sector and is part of the Bank of England, assessed eight major U.K. banks and building societies to ensure they held capital resources representing at least 7% of their risk-weighted assets by the end of 2013.

As at the end of 2012, the PRA calculated risk-weighted assets and capital resources at Lloyds were £351 billion and £16 billion respectively, giving a ratio of 4.6%.

The PRA acknowledged the bank's existing plans would produce extra capital of £1.6 billion this year, leaving a further £7 billion to be generated.

Lloyds said this morning that, based on its recent actions, a further £4.2 billion of capital had been produced, and that plans to generate the outstanding £2.8 billion would commence before July. The FTSE 100 member also confirmed its progress was expected to be met without the issue of extra shares.

Other organisations named by the PRA today as carrying a shortfall were Barclays, Co-operative Bank, Nationwide and Royal Bank of Scotland, with the combined deficit coming in at £27 billion.

HSBC, Standard Chartered and the U.K. arm of Santander were all deemed to have met the PRA's 7% capital measure.

Of course, whether today's update from the PRA as well as the wider prospects for the banking sector still combine to make Lloyds shares a buy is something only you can decide.

However, if you currently own Lloyds shares and are looking for bargains outside of the banking sector, this special market research divulges five particularly attractive possibilities.

Indeed, all five opportunities offer a rich mix of robust prospects, illustrious histories and dependable dividends, and have just been declared by the Fool as "5 Blue Chips You Can Retire On"!

Just click here for your report -- it's free.

The article Regulator Identifies £8.6bn Capital Shortfall at Lloyds originally appeared on

Maynard does not own any share mentioned in this article. The Motley Fool owns shares in Standard Chartered. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.