Osborne Urged To Begin Lloyds Share Sale

By Mark Kleinman, City Editor

The agency which manages taxpayers' stake in Lloyds Banking Group has told George Osborne that the sale of the Government's shareholding can begin imminently, paving the way for a disposal to take place within days.

Sky News understands that UK Financial Investments (UKFI) has informed the Treasury that it believes that the recent surge in Lloyds' share price means that taxpayers could receive value for money from a sale as early as this week.

The advice to the Chancellor does not mean that a placing of billions of pounds-worth of Lloyds stock will definitely take place that soon.

The Treasury has said consistently that it will not be rushed into a sale and that no timetable has been set following Mr Osborne's Mansion House speech in June in which he said the time to begin offloading the stake was fast-approaching.

However, Treasury sources said they had been told that UKFI was "actively considering" pursuing an imminent sale, with this week considered to be the last viable window for a big share trade before September.

A disposal of part of the Government's 39% stake in Lloyds is almost guaranteed to happen by the middle of September if the bank's share price maintains its recent momentum.

Such a deal has been widely forecast since Lloyds' resounding return to the black last week, when it announced a £2.1bn profit for the first half of 2013.

Whatever the timing of a disposal, it would be a significant moment in unwinding the legacy of the financial crisis that initially hit the UK in 2007 when Northern Rock was forced to seek emergency funding from the Bank of England.

Mr Osborne has been given the advice by UKFI

The precise size of a Lloyds share sale is unclear although bankers say it is unlikely to account for less than a quarter of the Government's stake, which would be worth just over £5bn at today's share price just before the market close of 74.1p.

During the last 12 months, Lloyds shares have soared by nearly 140% as investors have begun to understand the bank's future profitability and potential shareholder returns.

Antonio Horta-Osorio, Lloyds chief executive, used last week's interim results media briefing to issue thinly-veiled encouragement to Mr Osborne to begin selling taxpayer-owned shares.

He said it was a matter for the Chancellor to determine when to do so, although his repeated references to the risks of a repeat of the eurozone crisis triggering market volatility were a clear hint of his belief that a delay could undermine efforts to sell taxpayers' stake for a profit.

In subsequent meetings with investors, he is understood to have pledged that Lloyds would seek to pay out up to 70% of its profits in dividends within three years, a promise that should offer continued support to its share price in the coming weeks.

Lloyds has been prohibited from paying dividends to ordinary shareholders since its £20bn bailout in 2008, which followed its takeover of the stricken mortgage lender HBOS.

The price of any Government placing of Lloyds shares would be crucial to Mr Osborne's presentation of a sale, with 73.6p the average price at which the last Labour government acquired the stake.

Although an imminent placing would be unlikely to occur above that level, bankers and investors believe it would be possible to do so for a price above 70p, which itself is well in excess of the 61p at which the stake is recorded in the national accounts.

The lower figure does not take into account £2.5bn of fees paid by Lloyds for implicit guarantees covering its toxic loans in the wake of the 2008 rescue.

The initial sale of part of the Government's Lloyds stake would be structured by engaging investment banks after the stock market closes and reaching out to scores of potential investors to build a book of orders for the shares before markets open the following morning.

Lloyds and UKFI declined to comment.

Anda sedang membaca artikel tentang

Osborne Urged To Begin Lloyds Share Sale

Dengan url

http://cembururabun.blogspot.com/2013/08/osborne-urged-to-begin-lloyds-share-sale.html

Cemburu Rabun