LONDON – The Lloyds Banking Group said on Thursday that it would offer to exchange as much as 5 billion pounds’ worth of bonds it issued to shore up its capital during the financial crisis for new securities or cash.
The bank, which is partially owned by the British government, holds about £8.4 billion, or about $14 billion, in so-called enhanced capital notes.
Lloyds said it would offer to swap those notes for new securities or, for certain eligible investors, for cash. The bank said the exchange would allow Lloyds to better comply with new capital requirements adopted by the European Commission.
“Whilst still uncertain, the group’s management believes recent developments resulting in higher capital requirements for banks, including a changed definition of core capital, make it likely that the E.C.N.’s will not provide going concern benefit under future stress tests,” Lloyds said in a statement, referring to the enhanced capital notes.
Lloyds said it would take a one-time accounting charge of about £1 billion in the first half of 2014 if all of the new securities were issued.
Lloyds has seen its financial outlook improve and is seeking to move beyond its legacy issues.
In February, Lloyds said it returned to a statutory profit before tax of £415 million in 2013, an important measure for the lender. The bank last posted a statutory profit in 2010.
For the full year, Lloyds reported a loss of £838 million, compared with a loss of £1.47 billion in 2012.
In September, the British government, which provided Lloyds with a £17 billion bailout during the financial crisis, reduced its stake in the bank to 33 percent from 39 percent. The government has made selling its remaining holdings a priority.
An earlier version of this article misstated the size of the British government's stake sale in September. It reduced its stake in the bank to 33 percent from 39 percent; it did not sell 6 percent of its stake.