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| Government kicks off Lloyds sale | |
| (35 minutes later) | |
| The government has begun to sell off its stake in Lloyds Banking Group in a move that marks a significant step in returning the bailed out bank to the private sector five years after the financial crisis began. | |
| The announcement, the subject of much speculation since the chancellor's Mansion House speech in June, was made just after the stock market closed when the banks advising the government began to approach major City investors about buying chunks of the 4.2bn of shares being put up for sale, valued at £3.3bn. | |
| UK Financial Investments, the body set up to look after the stakes in the bailed out banks, advised George Osborne on Monday afternoon that it was now time to sell the shares. | UK Financial Investments, the body set up to look after the stakes in the bailed out banks, advised George Osborne on Monday afternoon that it was now time to sell the shares. |
| "The chancellor agrees with that advice and has authorised the process to begin," a Treasury spokesman said. "The chancellor set out the government's objectives for its shareholdings in the banks at the Mansion House speech earlier this year. We want to get the best value for the taxpayer, maximise support for the economy and restore them to private ownership. The government will only conclude a sale if these objectives are met." | "The chancellor agrees with that advice and has authorised the process to begin," a Treasury spokesman said. "The chancellor set out the government's objectives for its shareholdings in the banks at the Mansion House speech earlier this year. We want to get the best value for the taxpayer, maximise support for the economy and restore them to private ownership. The government will only conclude a sale if these objectives are met." |
| In the Mansion House speech, Osborne signalled that after a sale to big City institutions, retail investors would be given the chance to buy shares. | In the Mansion House speech, Osborne signalled that after a sale to big City institutions, retail investors would be given the chance to buy shares. |
| At current share prices the government is likely to be able to make a profit on its first selloff. The shares closed on Monday night at 77.3p – above the 73.6p average price at which the government spent £20bn buying the stake. The tranche of shares being sold is likely to be priced at a discount of 5% to the current price – which is very close to the 73.6p. | At current share prices the government is likely to be able to make a profit on its first selloff. The shares closed on Monday night at 77.3p – above the 73.6p average price at which the government spent £20bn buying the stake. The tranche of shares being sold is likely to be priced at a discount of 5% to the current price – which is very close to the 73.6p. |
| The government may also be able to claim the shares are being sold at above the value that appears in the national accounts, of 61p. That represents the average price at which the shares were trading on the days the government bought the shares rather than the actual price paid. | The government may also be able to claim the shares are being sold at above the value that appears in the national accounts, of 61p. That represents the average price at which the shares were trading on the days the government bought the shares rather than the actual price paid. |
| The boss of Lloyds, António Horta-Osório, has had his £1.5m bonus linked to the government selling off a third of its 39% stake above 61p. | The boss of Lloyds, António Horta-Osório, has had his £1.5m bonus linked to the government selling off a third of its 39% stake above 61p. |
| UKFI – which on Monday announced a new boss James Leigh Pemberton, son of former Bank of England governor Robin Leigh Pemberton – said it would place 6% of the shares in issue. This is expected to reduce the government's holding from 38.7% to approximately 32.7%. | UKFI – which on Monday announced a new boss James Leigh Pemberton, son of former Bank of England governor Robin Leigh Pemberton – said it would place 6% of the shares in issue. This is expected to reduce the government's holding from 38.7% to approximately 32.7%. |
| UKFI and HM Treasury will not sell any more shares for 90 calendar days. | UKFI and HM Treasury will not sell any more shares for 90 calendar days. |