Lloyds has completed a record 13.5 billion pound ($21.9 billion) rights issue, ending a turbulent period for the British bank and shifting investor focus to a potential government stake sale in 2010.

The cash call -- the world's largest to date -- is a key plank of a bumper capital raising effort worth over 23 billion pounds in total and aimed at helping Britain's largest retail bank to avoid a state-backed scheme for bad debts.

In a statement on Monday, Lloyds Banking Group said around 95.3 percent of new shares offered were taken up by investors including the British government, which owns around 43 percent.

That left just over 600 million pounds of shares to be placed by its underwriters, Bank of America Merrill Lynch, UBS and Citigroup -- far better than Lloyds' last rights offer in June, which left a rump of 13.1 percent.

Traders in London said the rump was placed by 1000 GMT on Monday and sold at around 56 pence, close to Friday's close. An official statement from the bank is due later on Monday.

The rights issue was priced at 37 pence per share, with investors being offered 1.34 shares for every existing share held. That compares with Friday's close at 56.2 pence.

A high take-up -- with the rump placed within two hours -- is the strongest indication yet of shareholder support for Lloyds' turnaround effort and of appetite for its shares.

I take it as a good sign. Over 95 percent feels quite good to me, analyst Mike Trippitt at Oriel Securities said.

This has drawn a line under the capital issue -- they have a solid capital position, a strong balance sheet. The spotlight now will be on the operating performance.

Lloyds shares opened up over 3 percent, as investors were cheered by the take-up and by Abu Dhabi's $10 billion bailout for Dubai, where Lloyds is a creditor. At 1157 GMT (6:57 a.m. EST) the shares were down 0.7 percent at 55.8 pence in a strong market, held back by the placing of outstanding shares.

Analysts and investors said clarity on the bank's capital and a focus on its operational progress would also make it easier for the government - which has bought into Lloyds at an average price of 122.6 pence - to begin considering selling down its share as early as the start of next year.

What we have seen today is there is appetite for the equity, so it would be smart for a variety of reasons for the government to begin to place a small amount of its stake in the first quarter of 2010, analyst Joe Dickerson at Execution said.

UK Financial Investments, which manages government stakes in nationalized or bailed-out banks, is expected to test appetite for its shares soon, but it is unclear whether a sale could come before a general election due by early June.

MOVING ON UP

The bank, which has 2.8 million small shareholders accounting for 7 percent of its equity before the rights issue, has faced anger over mistakes made during the crisis and a decision to buy embattled rival HBOS -- heightened by revelations that the Bank of England had secretly lent HBOS 25 billion pounds to keep it afloat at the height of the crunch.

But investors voted overwhelmingly last month to back its capital-raising plan, which includes a debt exchange into so-called contingent capital, and totals over 23 billion pounds after an increase announced on Friday.

The new bonds, dubbed cocos, are designed to convert into equity if Lloyds's core Tier 1 capital ratio falls below 5 percent, shoring up its position if it hits rocky times.

(Editing by David Cowell)

($1 = 0.6161 pound)

Dubai Bank of america Citigroup United kingdom