Taxpayers have made a slim profit after the UK government sold a £4.2 billion tranche of shares in Lloyds Banking Group, paving the way for a complete exit next year.
The sale, hailed by Chancellor George Osborne as “good value”, has cut the Treasury’s holding in the group to below 25 per cent, and the proceeds will be used to reduce the national debt.
UK Financial Investments (UKFI), which manages the state’s stakes in Lloyds and fellow bailed-out lender Royal Bank of Scotland, sold a 7.8 per cent chunk at 75.5p a share. Although this represented a 4.6 per cent discount to Tuesday’s closing price, it was higher than the average 73.6p paid by the government and generated a profit of about £106 million.
Shore Capital analyst Gary Greenwood said the government is eyeing a full exit before the general election in May next year, “but a lot depends on market conditions”. Yesterday’s disposal, which was flagged on Tuesday night, was to institutional investors only, and analysts said the next sale – expected around the end of June at the earliest – was likely to be made available to the public.
The government started to reduce its holding in Lloyds in September, when the shares were sold at 75p each. That was seen as a milestone in the recovery from the 2008 financial crisis, when taxpayers pumped a combined £66bn into Lloyds and RBS.
Lloyds shares are up about 50 per cent since the start of 2013.