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Best business bank account closing its funding gap

30. Sep, 2010 Categories: Current Account Charges, News by Business Bank Accounts 0 Comments

One of the best business bank accounts in the country recently announced that it will be able to close its funding gap ahead of schedule thanks to the recent re-opening of the wholesale markets, which had been clamped tight since the beginning of the banking crisis.

Eric Danels, outgoing chief executive for Lloyds, recently told banking investors that the financial services provider had been able to raise in excess of £25 billion in new funds from the wholesale markets, which completely smashed its financing targets for 2010.

The ability to raise the funds through the wholesale market is an integral part of the bank’s recovery plan as it is reliant on £132 billion worth of facilities from such central UK lenders as the Bank of England in order to ensure it retains enough working capital to continue to operate.  Since a significant percentage of the emergency measures put in place during the credit crunch scheduled to end in 2011, Lloyds faces the task of demonstrating it can function without the monetary aid.

The bank has been insistent that it has no need to raise the entire £132 billion from the markets due to its shuttering of more risky business ventures that had eaten into its venture capital, which has reduced its need for more funding in addition to stuffing its coffers from new customer deposits.  The £132 billion figure is above and beyond the £20 billion taxpayer cash bailout the bank received, leaving the government with a 42 per cent stake in Lloyds.

Exane BMP Paribas banks analyst Ian Gordon commented that Lloyds managing to raise £25 billion from the markets could give it a leg up on funding for the 2011 calendar year, stating that while the figure offers no guarantees that the entire funding provided by the government will be subject to refinancing or rolling off without extension, the possibility of such an occurrence is now more likely than it was previous to the newly raised funds.

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Tags: Current Account Charges, Lloyds, venture capital, working capital