Government to sell off £4.2bn of Lloyds shares

UK FINANCIAL Investments (UKFI), which manages the government’s stakes in bailed out banks, yesterday said it plans to sell another chunk of its stake in Lloyds worth £4.2 billion at current prices.

Picture: PA

Around 5.3 billion shares will be placed with institutional investors, approximately 7.5 per cent of the bank. The placing will see the overall size of HM Treasury’s shareholding reduced from just under a third to approximately 25 per cent.

Having sold a 6 per cent stake last September, the government has said it wants to sell the remainder before the next election in 2015.

Details of the placing price and the exact number of shares under the latest placing have not yet been announced.The average price paid for Lloyds shares was 73.6p, but the Treasury has also indicated that it regards 61p – which was the price of Lloyds shares in the market at the time rather than the purchase price – as its preferred reference level.

Given a placing is likely to be at below the current share price, it is thought that the government will break even or shoulder a small loss on what it paid for the shares it is looking to place.

Bank of America Merrill Lynch, JP Morgan Securities, Morgan Stanley Securities and UBS have been appointed to act as bookrunners in connection with the placing.

UKFI and HM Treasury have agreed not to sell further shares in the company for a period of 90 calendar days following the completion of the placing without the prior written consent of a majority of the bookrunners.