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Government takes another step towards selling stake in Lloyds and RBS Government takes another step towards selling stake in Lloyds and RBS
(about 2 hours later)
Fresh evidence has emerged that the government is preparing to sell off the taxpayer's £65bn stakes in Lloyds Banking Group and Royal Bank of Scotland after bankers were asked to tender for contracts to advise on the potential sales. The government has taken a step towards selling off the taxpayer's £65bn stakes in Lloyds Banking Group and Royal Bank of Scotland, asking bankers to tender for contracts to advise on the potential sales.
The advert, placed by UK Financial Investments (UKFI), the body set up to look after the taxpayer's stakes in the bailed-out banks, comes after the chancellor said he was ready to sell off Lloyds but was commissioning work on whether RBS should be broken up. The advert, placed by UK Financial Investments (UKFI), the body set up to look after the taxpayer stakes in the bailed-out banks, comes after the chancellor said he was ready to sell off Lloyds but was commissioning work on whether RBS should be broken up.
In a Mansion House speech this month, George Osborne said he was "actively considering options for share sales in Lloyds", in which the taxpayer has a 39% stake. But he appeared to delay any sell-off of 81%-owned RBS by saying he would look at whether a bad bank should be hived off.In a Mansion House speech this month, George Osborne said he was "actively considering options for share sales in Lloyds", in which the taxpayer has a 39% stake. But he appeared to delay any sell-off of 81%-owned RBS by saying he would look at whether a bad bank should be hived off.
The stake in Lloyds is unlikely to be sold before the bank's interim results on 1 August but Osborne has been careful not to put a timescale on any sell-off despite speculation he is eyeing a sale before the May 2015 general election.The stake in Lloyds is unlikely to be sold before the bank's interim results on 1 August but Osborne has been careful not to put a timescale on any sell-off despite speculation he is eyeing a sale before the May 2015 general election.
Shares in Lloyds reached 63.93p on Friday afternoon, above the 61p which the government has set as its new target price to trigger a sell-off of the stake. RBS shares, which have fallen since the Mansion House speech, were trading at 276p, still below the range of break-even prices attached to the bank's stock.Shares in Lloyds reached 63.93p on Friday afternoon, above the 61p which the government has set as its new target price to trigger a sell-off of the stake. RBS shares, which have fallen since the Mansion House speech, were trading at 276p, still below the range of break-even prices attached to the bank's stock.
Until March, when the bonus for the Lloyds boss, António Horta-Osório, was linked to selling the stake in the bank above 61p, the City had regarded 73.6p as break-even for the taxpayer's stake in Lloyds and 500p for RBS.Until March, when the bonus for the Lloyds boss, António Horta-Osório, was linked to selling the stake in the bank above 61p, the City had regarded 73.6p as break-even for the taxpayer's stake in Lloyds and 500p for RBS.
UKFI, which is also seeking a new chief executive to replace Jim O'Neil who has resigned to return to the City, appears to expect to appoint a number of bankers.UKFI, which is also seeking a new chief executive to replace Jim O'Neil who has resigned to return to the City, appears to expect to appoint a number of bankers.
It is seeking bookrunners – the name for the lead banks on any sell-offs – co-lead managers, capital markets advisers and financial advisers who could take part in the team to oversee a share sale.It is seeking bookrunners – the name for the lead banks on any sell-offs – co-lead managers, capital markets advisers and financial advisers who could take part in the team to oversee a share sale.
Osborne told the Mansion House audience that he expected the first tranche of the Lloyds stake to be sold to big City institutions but indicated that the public would be given the chance to buy shares at a later stage.Osborne told the Mansion House audience that he expected the first tranche of the Lloyds stake to be sold to big City institutions but indicated that the public would be given the chance to buy shares at a later stage.
He did not give any clues as to how RBS might be sold off other than to say it was "some way off", despite the resignation of the bank's boss, Stephen Hester, in a move intended to speed up a sell-off.He did not give any clues as to how RBS might be sold off other than to say it was "some way off", despite the resignation of the bank's boss, Stephen Hester, in a move intended to speed up a sell-off.
UKFI must formally put out a notice to tender under EU rules and did the same when Northern Rock was privatised. Deutsche Bank advised on that sale to Sir Richard Branson's Virgin Money.UKFI must formally put out a notice to tender under EU rules and did the same when Northern Rock was privatised. Deutsche Bank advised on that sale to Sir Richard Branson's Virgin Money.
UKFI said bankers should submit their tenders to provide "specialist financial services" by 8 July. "It is from these panels that UKFI would expect to make appointments to assist it in any future transaction(s) involving HM government's shareholdings in Lloyds and RBS," UKFI said.UKFI said bankers should submit their tenders to provide "specialist financial services" by 8 July. "It is from these panels that UKFI would expect to make appointments to assist it in any future transaction(s) involving HM government's shareholdings in Lloyds and RBS," UKFI said.