Treasury pockets £500m after Lloyds shares sell-off

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.

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.