Lloyds Banking Group has taken further steps to bolster its capital strength with a £7.5bn bond swap offer as it also raised an extra $5bn (£3.4bn) in government guaranteed funding in the bond markets.

The bank, in which the UK taxpayer has a large stake, on Wednesday offered junior bond holders the chance to get out of their investments at a loss of between 20p and 55p in the pound. Bondholders will be offered new senior unsecured bonds instead.