Lloyds share sale generates profit for taxpayer

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The sale of a 6 per cent stake in bailed-out lender Lloyds Banking Group has delivered a profit of up to £586 million for the taxpayer.

UK Financial Investments (UKFI), the body created to manage the state’s holdings in Lloyds and Royal Bank of Scotland, said it has sold 2.4 billion Lloyds shares at 75p each for a total of £3.2 billion.

The sale price represents a £61 million profit on the 73.6p average price paid by the UK government at the time of its bailout in 2008, but will register as a paper profit of £586m on the state’s books because the Lloyds stake is recorded in the public finances at 61p per share.

However, the Treasury stressed that the higher profit figure would be subject to a decision by the Office for National Statistics.

Chancellor George Osborne said: “This is another step in the long journey in putting right what went so badly wrong in the British economy; 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.”

The sale was managed by joint bookrunners Bank of America Merrill Lynch, JP Morgan Cazenove and UBS, and leaves the taxpayer with a 32.7 per cent stake in Lloyds, down from 38.7 per cent previously.

Lloyds chief executive Antonio Horta-Osorio said: “I am pleased that the government has been able to begin the process of selling its stake, and give taxpayers the opportunity to get their money back.

“I believe this reflects the hard work undertaken over the last two years to make Lloyds a safe and profitable bank that is focused on supporting the UK economy.”

UKFI, which also looks after the government’s 81 per cent stake in RBS, said it would not sell more shares in Lloyds for a further 90 days unless it gets written consent from the bookrunners.

Joe Rundle, head of trading at ETX Capital, said: “The move to offload the 6 per cent stake is very welcome, particularly for the UK banking sector, which continues to suffer from a mixture of scandals, litigation and poor reputation amongst the UK public.

“Lloyds has turned out to be a model student versus RBS, which has been unable to repair its finances as quickly and as efficiently.”