Lloyds Banking Group PLC has launched a consent solicitation to amend the terms of its £750,000,000 Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities Callable 2029. The proposed changes aim to align the subordination provisions of these securities with those of the banks other additional tier 1 issuances, expected to be outstanding as of July 1, 2026. This move follows a 2020 request from the UK Prudential Regulation Authority (PRA) to remediate the prudential treatment of legacy instruments.
The amendments would allow Lloyds to subordinate the securities to its existing preference shares and any pari passu securities, contingent on the banks determination that the securities would not be included in its Additional Tier 1 Capital unless the holders of the preference shares are ranked senior. If approved, Lloyds intends to reclassify the existing preference shares as Tier 2 Capital from July 1, 2026, increasing its Tier 2 Capital by approximately £400 million.
Securityholders are being offered consent fees to approve the changes, with early and late consent fees available for eligible and ineligible securityholders. The consent solicitation includes a detailed timetable, with key deadlines for voting instructions and the meeting to approve the amendments. The PRA has confirmed no objection to the proposal, and rating agencies are not expected to change the securities ratings as a result.