Pre-election share issue planned
Treasury to sell 15% of Lloyds Banking Group stake
Government officials and ministers believe the bank’s balance sheet is now sufficiently robust to move the bank closer to being fully privatised.
It could raise £3bn and will provide Chancellor George Osborne (pictured) with a timely pre-election boost to the public finances ahead of the General Election.
Publication of the Bank of England’s stress tests yesterday has provided further evidence that the bank is able to withstand a further financial shock and that the taxpayer is able to recover more of the £20 billion that was invested to rescue it in 2008/2009.
The taxpayer currently holds 24.9% of the bank, compared to 43% at the time of the bail-out and the sale of more shares will depend on market conditions. The latest sale should take this down to about 20%
Shares in the bank were trading at 75.64p this afternoon against a break even price of 61.2p and average price paid by the government of 73.6p. The government raised £3.3bn from a sale of a 6.6% stake last year.
UK Financial Investments, which manages the government’s stake in the bailed out banks, said the sale would be through a pre-arranged trading plan managed by Morgan Stanley.
The trading plan will terminate no later than 30 June 2015. . As with all disposals, delivering value for money for the taxpayer is a key consideration and shares will not be sold below the average price per share that the previous government paid for them.
HMT currently owns 17.8 billion ordinary shares in the Company, which represents 24.9% of the issued ordinary share capital of the Company.
JP Morgan Cazenove is acting as Privatisation Strategy Adviser to UKFI. Freshfields Bruckhaus Deringer is providing Legal Counsel.