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Nov. 3 (Bloomberg) -- Lloyds Banking Group Plc will raiseat least 7.5 billion pounds ($12.3 billion) of new capitalthrough a bond exchange, part of the 21 billion pounds it’sseeking to exit the U.K.’s asset insurance program.

Britain’s biggest mortgage lender is offering to swap 16.5billion pounds of bonds and preference shares for equity and newdated notes with mandatory interest payments, it said in astatement today. The new notes, known as contingent core Tier 1securities, or CoCos, will automatically become equity if thebank’s core capital falls to less than 5 percent, Lloyds said.