London - The UK government has sold £4.2 billion (R74.8bn) worth of shares in Lloyds Banking Group to cut its stake in the country’s largest retail bank to less than 25 percent and putting it on course for a complete exit in the next year.
Finance Minister George Osborne said yesterday’s sale “represents good value for the taxpayer”, and the proceeds would be used to reduce the national debt. “It is another step in repairing the banks, in reducing our national debt and in getting the taxpayers’ money back,” he said.
Taxpayers stand to make a profit on the £20bn pumped in to rescue Lloyds in 2009, which analysts and bankers said should encourage the government to speed up its exit. Banking sources have said another sizeable sale was expected later this year and a full exit was possible before the general election in May next year.
“Ideally they want to be out before the next election, but a lot depends on market conditions,” Gary Greenwood, an analyst at Shore Capital, said.
The next sale is expected to include an offer to retail investors, which sources familiar with the matter said would be easier to do once there was greater clarity over the prospects for Lloyds resuming dividend payments.
UK Financial Investments (UKFI), the body that manages the government’s stakes in both Lloyds and Royal Bank of Scotland (RBS), said yesterday that it had sold a 7.8 percent stake in Lloyds, or 5.6 billion shares, at 75.5p a share. It was the biggest ever share sale via an accelerated book building process outside of the US.
The sale, at a 4.6 percent discount to Tuesday’s close, cut Britain’s holding in Lloyds to 24.9 percent and gave a profit to the average 73.6p at which the government bought the shares.
The offer was 1.7 times covered at the sale price, a person familiar with the matter said. Half of the investors came from Britain, 30 percent from the US, 10 percent from Asia and 10 percent from continental Europe, the source said.
Britain began to offload its 39 percent holding in Lloyds in September last year, when shares were sold at 75p apiece. That was seen as a milestone in the country’s recovery from the 2008 financial crisis, when taxpayers pumped a combined £66bn into Lloyds and RBS.
The sale is a vindication for Lloyds chief executive Antonio Horta-Osorio, who has restored the bank to profitability since his appointment in 2011, simplifying the business to focus on lending to UK households and businesses.
UKFI said it would not sell any more Lloyds shares before June 23. – Reuters