AN INVESTOR boycott of government-owned bank shares could frustrate efforts to return Lloyds Banking Group back to the private sector, sources have warned.
Some fund managers have said they will be wary of buying stock released in staggered sales until banks and regulators clarify the rules on how quickly company owners are allowed to sell more shares – a dispute that could hurt large stock offers such as Lloyds.
The government has flagged it is ready to start offloading its 39 per cent stake in Lloyds and on Friday began the process of appointing advisers for the sale, expected to take place incrementally over many months.
The concern over how quickly shares will be sold emerged in May when Lloyds sold 15 per cent of wealth manager St James’s Place, just over ten weeks after a previous sale, despite having agreed not to reduce its stake further for at least a year.
The so-called “lock-up” was waived by bookrunner Bank of America Merrill Lynch. And although lock-ups are waived relatively often, and investors are warned that the timetable for additional share sales can change, it usually happens closer to the expiry date than in the St James’s case.
Investors say they want clarity on the terms under which such agreements can be waived. It is thought the Association of British Insurers (ABI) has written to regulator the Financial Conduct Authority (FCA) asking them to look at the issue of lock-ups and their importance in maintaining an orderly market.
One fund manager who declined to be named said: “It is very important the authorities do what they can to shore up investor confidence before the likes of Lloyds and RBS come to market. They will be some of the biggest partial stake sales seen for a long time.”
Another added: “Decisions to blacklist are on people’s agenda. This goes right to the heart of whether we have trust in the markets in which we operate.”