World Economy

Troubled Lloyds’ Remaining Shares on Sale

Troubled Lloyds’ Remaining Shares on SaleTroubled Lloyds’ Remaining Shares on Sale

The UK government may sell about £2.5 billion ($3.8 billion) of Lloyds Banking Group Plc shares to institutional investors alongside 2 billion pounds to individuals early next year to return the lender to full private ownership, a person with knowledge of the matter said.

The treasury plans to offer all of the remaining Lloyds shares at the end of a yearlong trading program in December, said the person, who asked not to be identified because the details are private. About £2 billion of the taxpayers’ remaining £6.5 billion stake could be sold before the end of the program depending on market conditions, according to the person, Bloomberg reported.

Chancellor of the Exchequer George Osborne pledged to sell at least £2 billion of Lloyds shares to households on Monday as he seeks to recover funds spent bailing out the lender during the financial crisis. He also started selling shares in Royal Bank of Scotland Group Plc, the country’s most expensive bailout, at a loss in August.

“It’s the biggest privatization for more than 20 years,” Osborne said in a speech to the Conservatives’ annual conference in Manchester, England, on Monday. “Every penny we raise will be used to pay off our debts. We’re going to build the share-owning democracy this party has always believed in.”

The government plans to “fully exit” its Lloyds stake “in the coming months,” according to a statement on Monday. Members of the public will be offered a discount of 5% of the market price, with a bonus share for every 10 shares if they hold their investment for more than a year, the government said.

 Final Sale

Preparations are being made for institutional investors to participate in a final sale alongside the public, according to the person. While £2 billion of stock will be made available to individuals, the amount allocated to the public will depend on demand. The remaining stake will be sold to money managers, the person said.

Lloyds shares rose 1% to 77.32 pence in London. They are up about 2% this year. The treasury has said it won’t sell shares if they dip below 73.6 pence, the value it assigns to the bailout price. RBS has dropped 17.6% this year.

Under the current yearlong trading plan, UK Financial Investments Ltd., which manages the sale of government-owned assets, has been selling small batches of Lloyds shares to investors, reducing its holding from 25%. A sale in September pushed the stake below 12%. By contrast, taxpayers still own 72.9% of Edinburgh-based RBS.

The government has recouped about £15 billion to date from selling shares to institutional investors through the trading plan and from two large disposals, as it seeks to recover all of the £20.5 billion spent bailing out the lender.

Lloyds Chief Executive Officer Antonio Horta-Osorio has eliminated thousands of jobs, sold assets and cut the consumer network to return the bank to its first annual profit in five years in 2014. Britain’s largest mortgage provider said in July it will consider paying special dividends and share buybacks after first-half profit climbed 38%.

The London-based bank is scheduled to report third-quarter earnings at the end of October.