Lloyds Banking Group may have to pay out at least £300 million in fees to investment bankers to underwrite its planned £11 billion rights issue.

The huge payout could again ignite a row about bankers’ bonuses. As Lloyds is 43 per cent-owned by the Government, a large part of those fees will be borne by the taxpayer.

The final bill for investment bankers’ services may be much larger, as Lloyds will also need to secure underwriting for its plans to raise a further £15 billion by converting bonds and preference shares into common equity. Lloyds is trying to raise about £26 billion so that it can avoid using the Government’s asset protection scheme (APS). It is also considering sales of assets, such as Scottish Widows.

Investment banks normally charge about 3 per cent of the value of a rights issue in fees to provide underwriting. The Lloyds rights issue is seen by some as risky as it is one of the largest capital-raisings by a bank. As a consequence, investment bankers may push for a larger fee.

However, the Government, as the majority shareholder, it is likely to keep the fees down to a minimum.

UBS, Lloyds’ broker, and Bank of America Merrill Lynch, its financial adviser, are understood to have been lined up as the lead underwriters. Citigroup, Goldman Sachs, JPMorgan Cazenove and HSBC would provide sub-underwriting.

Lloyds would not comment.

The bank is talking to the Treasury and its regulators over its proposal, known as Plan B, to escape the APS by raising capital by other means.

Eric Daniels, the chief executive, is keen to do so on the grounds that the £15.6 billion APS fee is punitive and so that the State’s stake can be capped at its present 43 per cent level. If Lloyds does enter the APS — which would involve putting £260 billion of toxic assets into the scheme — the Government’s stake would rise to 63 per cent.

Some believe that Lloyds will still have to use the APS in part because the tripartite authorities — made up of the Treasury, the Financial Services Authority and the Bank of England — are worried about the risk of allowing Lloyds to escape the scheme completely. The Bank of England, in particular, is understood to have concerns, especially after Mervyn King, its Governor, said that the economy could take another turn for the worse.

The APS — announced in February amid dire fears over banks’ financial strength — was designed to be a giant insurance scheme for the toxic assets of Lloyds and Royal Bank of Scotland.RBS plans to proceed with plans to put £325 billion into the APS but it wants to raise about £4 billion in a placing to pay some of the fees to prevent existing shareholders being heavily diluted.

The nightmare scenario for politicians is to allow Lloyds to walk away from the APS to undetake a bumper rights issue now, only for it to fall back on government help later — possibly near the general election.

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