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Lloyds shares could be sold by Treasury as early as August Lloyds shares could be sold by Treasury as early as August
(3 months later)
The Treasury could sell off the first chunk of its stake in Lloyds Banking Group as early as August to coincide with the bailed out bank's interim results.The Treasury could sell off the first chunk of its stake in Lloyds Banking Group as early as August to coincide with the bailed out bank's interim results.
The timetable is not yet finalised, but the Treasury is believed to be keen to kickstart the sale as soon as possible to show it is able to start returning the bank, which is 39% owned by the taxpayer, to the private sector.The timetable is not yet finalised, but the Treasury is believed to be keen to kickstart the sale as soon as possible to show it is able to start returning the bank, which is 39% owned by the taxpayer, to the private sector.
The preparations contrast with Royal Bank of Scotland, which is 81% government-owned and was warned on Friday by Moody's that it faced a possible downgrade. The ratings agency issued the warning because of the review commissioned by the Treasury into whether the bank should be broken up.The preparations contrast with Royal Bank of Scotland, which is 81% government-owned and was warned on Friday by Moody's that it faced a possible downgrade. The ratings agency issued the warning because of the review commissioned by the Treasury into whether the bank should be broken up.
Lloyds' interim results are due on 1 August, and while a share sale would not be possible before then, a placing of shares could take place shortly afterwards, depending on the bank's share price.Lloyds' interim results are due on 1 August, and while a share sale would not be possible before then, a placing of shares could take place shortly afterwards, depending on the bank's share price.
George Osborne said in his Mansion House speech last month that big City institutions were most likely to be offered the chance to buy shares first. But the Treasury is also testing the water about a sale of a stake up to 10% to cash-rich sovereign wealth funds. The BBC reported that the Treasury wanted to make sure that any stake going to a sovereign wealth fund was sold at a premium to the current share price of 65p.George Osborne said in his Mansion House speech last month that big City institutions were most likely to be offered the chance to buy shares first. But the Treasury is also testing the water about a sale of a stake up to 10% to cash-rich sovereign wealth funds. The BBC reported that the Treasury wanted to make sure that any stake going to a sovereign wealth fund was sold at a premium to the current share price of 65p.
This will seen as an attempt to appease the City institutions, investing on behalf of pension funds and long-term savers, which have been holding shares in Lloyds throughout the bailout and would not want outside governments to be offered shares at a discount.This will seen as an attempt to appease the City institutions, investing on behalf of pension funds and long-term savers, which have been holding shares in Lloyds throughout the bailout and would not want outside governments to be offered shares at a discount.
The pricing of the first sale will be crucial and the Lloyds share price may need to be above 70p to enable a share placing to be priced at a slight discount. One guide could be the discount to market prices at which the Swedish government placed a stake in Nordea Bank last month.The pricing of the first sale will be crucial and the Lloyds share price may need to be above 70p to enable a share placing to be priced at a slight discount. One guide could be the discount to market prices at which the Swedish government placed a stake in Nordea Bank last month.
Speculation about a sale of Lloyds has been swirling since 1 March, when the Treasury linked part of the bonus of the bank's boss, António Horta-Osório, to selling off part of the stake above 61p. It intensified after Osborne told his Mansion House audience that he was "actively considering options for share sales in Lloyds".Speculation about a sale of Lloyds has been swirling since 1 March, when the Treasury linked part of the bonus of the bank's boss, António Horta-Osório, to selling off part of the stake above 61p. It intensified after Osborne told his Mansion House audience that he was "actively considering options for share sales in Lloyds".
After a placing for institutional investors, he said that a "retail offering to the general public" would be considered later.After a placing for institutional investors, he said that a "retail offering to the general public" would be considered later.
A Treasury spokesman said the chancellor's position had not changed since last month's Mansion House speech, when Osborne had not set out a timetable for any share sale.A Treasury spokesman said the chancellor's position had not changed since last month's Mansion House speech, when Osborne had not set out a timetable for any share sale.
During evidence to the Treasury select committee last year, Richard Buxton, then the head of UK equities at Schroders, said he would be disappointed if there was a sale to a sovereign wealth fund which was then able to a make a lot of money. He said: "If you are prepared to be patient you don't have to give the taxpayers' money to a sovereign wealth fund."During evidence to the Treasury select committee last year, Richard Buxton, then the head of UK equities at Schroders, said he would be disappointed if there was a sale to a sovereign wealth fund which was then able to a make a lot of money. He said: "If you are prepared to be patient you don't have to give the taxpayers' money to a sovereign wealth fund."
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