LONDON: Britain could have sold the six percent stake in banking group Lloyds it placed with investment institutions nearly three times over, sources said, raising the prospect it could sell all its shares before the 2015 General Election.
The £3.2bn ($5bn) divestment, five years after Lloyds and rival Royal Bank of Scotland (RBS) were bailed out at the height of the credit crunch with a combined 66 billion pounds of taxpayers’ cash, represents a milestone in the economy’s recovery from the financial crisis.
The sale of the Lloyds stake has long been a priority for the Conservative-led coalition government, which sees the return of Lloyds to private ownership as an important step in its plan to recover taxpayers’ money.
“This is another step in the long journey in putting right what went so badly wrong in the British economy,” Finance Minister George Osborne said.
“It’s another step in repairing the banks, it’s another step in getting the money back for the taxpayer, and it’s another step in reducing our national debt,” Osbourne added. The shares were sold to unnamed investment institutions at 75 pence per share, a 3 percent discount to Lloyds’ closing price on Monday. Sources with direct knowledge of the transaction said it was 2.8 times covered by demand.
Given the level of investor appetite, said analyst Ian Gordon at Investec, the rest of the Lloyds shares could be sold by the next election. By comparison, the United States sold $31.8bn worth of shares in Citigroup over a nine-month period in 2010.
“We regard the Government’s timing as impeccable and it appears credible to suggest that it could yet be out in full by the election,” Gordon said.
Paras Anand, head of European equities at Fidelity Worldwide Investment, said: “Today’s placing is a clear sign of confidence that the bank is well on the road to recovery.”
The sale of the 6 percent stake in Lloyds, carried out after Monday’s UK stock market close, comes two weeks before the Conservative annual conference and could allow Osborne to drive home the message that he is cleaning up the financial mess which they are keen to blame on the then-ruling Labour Party.
While polls forecast Labour will win a majority at the 2015 election, surveys show the Conservatives are more trusted by the public on handling the economy.
Mark Garnier, a Conservative lawmaker and ex investment banker who sits on the Treasury Select Committee — which examines the work of the finance ministry — also agreed a complete sale before the next election is possible.
Reuters
