Treasury pockets £500m after Lloyds shares sell-off

The Treasury has sold another chunk of its stake in Lloyds Banking Group, taking its holding in the bailed-out lender to below 21 per cent.
George Osborne "to sell £9bn of Lloyds share in next year". Picture: GettyGeorge Osborne "to sell £9bn of Lloyds share in next year". Picture: Getty
George Osborne "to sell £9bn of Lloyds share in next year". Picture: Getty

Yesterday’s disposal of around 1 per cent of the group represents stock worth more than £500 million at its latest market value.

The UK government announced in December it planned an “orderly and measured” sell-off of up to 5 per cent over six months, raising about £3 billion. This is being done in small parcels, rather than through larger tranches as had been done previously.

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No shares are to be sold below the price the government paid for them, which was 73.6p. Lloyds closed at 79.1p last night.

The Treasury has now recovered about £9.5bn of its £20bn bail-out funds but there are still just under 15 billion shares – equivalent to a stake of 20.95 per cent and worth £11.8bn – left to sell.

Chancellor George Osborne said recently he wants a further £9bn of Lloyds shares to be sold over the next 12 months, including about £4bn through a discounted offer to retail investors.

The stock market must be notified every time the government’s shareholding in the bank crosses a one percentage point threshold.

Investec analyst Ian Gordon said: “Although the pace has slowed a touch [constrained by market volumes], selldown of the UK government’s residual stake has continued…

“Under current Conservative Party proposals, a further circa £9bn is due to be sold over the next 12 months, including a £4bn public offer. As such, by end-2016, it appears reasonable to expect that the government may be out in full.”

The brokerage has a “hold” recommendation on shares in Lloyds Banking Group.

Lloyds is due to issue a trading update next Friday, when profits should benefit from the recovering economy.

Brokers at Keefe, Bruyette & Woods estimate Lloyds first-quarter underlying profits will lift by 16 per cent to £2.1bn as its asset quality and margins improve.