Lloyds Banking Group PLC said on Tuesday its shareholders will get a huge discount for subscribing to its £13.5 billion (US$22.3-billion) rights issue - the country's largest cash call ever - designed to limit British government control.

The pricing details published Tuesday show that shareholders can buy 1.34 new shares for each existing share at 37 pence - less than half of Lloyds' closing price Monday evening.

The 36.5 billion new shares represent 57.3 per cent of the bank's enlarged share capital.

Lloyds shares were up 1.37 per cent to 92.72 pence on Tuesday morning.

The government has already agreed to exercise its rights for new shares, thereby maintaining its equity stake in the bank at 43.4 per cent.

Lloyds said earlier this month that it will not join the British government's insurance plan to protect against losses on toxic assets, and that it will raise funds by disposing of its TSB brand and will sell the branches, savings accounts and branch-based mortgages of its Cheltenham & Gloucester unit.

This week's cash call is another part of its move to maintain a degree of independence by raising funds.

Debt conversion

On Monday, Lloyds completed the other part of its fund-raising, securing over £8.8 billion from a debt conversion offer.

The bond issue was substantially oversubscribed.

The bank has also agreed to pay the government a fee of £2.5 billion in return for the implicit protection already provided by government support.

Lloyds shareholders will vote on the details of the rights issue on Thursday.

Last Wednesday the banking group won European Union approval for its £17-billion ($28.6 billion) government capital injection in return for shrinking its operations.

EU regulators said Lloyds' plan to sell off more than 600 retail banking branches, or 4.6 per cent of its total, would allow a new rival to emerge.

They said that would help remove the competitive advantage Lloyds got from the British government bailout.

EU Competition Commissioner Neelie Kroes said she thought the sale was "a great deal" for British consumers.

Britain's Treasury minister Paul Myners said the divestments, combined with the sale of Royal Bank of Scotland PLC units and all of the state-owned Northern Rock, would lead to three new banks competing for consumers' business within four years.

The EU executive also approved a £2.5 billion exit fee that Lloyds will pay to reverse its planned participation in a government asset guarantee program, leaving Royal Bank of Scotland as the sole participant.

- AP

People enter the headquarters of Lloyds Banking Group in the City of London, Tuesday, November 3. AP