Lloyds returns £10.5bn as Osborne lifts sales

George Osborne has instructed the drip-drip sell-off of taxpayer shares

George Osborne has fired the starting gun on another huge sell-off of taxpayer-owned shares in Lloyds Banking Group as proceeds from previous sales topped half of the original £20bn bailout cost for the first time.

The Chancellor has told UK Financial Investments, the government-owned company which manages its Lloyds and RBS stakes, to continue the drip-drip sell-off of taxpayer shares through the broker Morgan Stanley. Since those sales began last December the broker has sold 4.2 billion shares in the market at an average price of just over 80p, raising a total of £3.4bn.

That represented just over 5 per cent of Lloyds and, thanks to the reintroduction of dividend payments, the disappearance of Labour’s threat to banks at the general election and rising profits from Lloyds, the shares were all sold above the average 73.6p paid by the taxpayer in the 2009 bailout.

Morgan Stanley has now been mandated to sell a further 5 per cent or so of the Government’s stake, as long as it can do so above the bailout price. After sales on Friday the stake has come down to below 19 per cent. In December it stood at just under 25 per cent.

Mr Osborne said: “The trading plan has been a huge success, with almost £3.5bn raised for the taxpayer so far. This means we have now recovered over £10.5bn in total, more than half of the taxpayers’ money put into Lloyds, and we now own under 19 per cent of the bank.

“But we’re determined to get on with the job of returning Lloyds to private ownership. That’s why I’m extending the plan for six months so that we can make even more progress in returning money to the taxpayer and paying down the national debt.”

He added that this would be part of his Budget announcement that the Treasury planned to raise £9bn through further Lloyds shares sales in the current fiscal year. That includes just over £1bn already raised by the first tranche of Morgan Stanley sales.

Last night it was reported that the Chancellor will lay out plans for privatising the Royal Bank of Scotland in next week’s Mansion House speech. The reports suggested that the Treasury’s stake in the bank could be sold well below the 502p at which the lender was bailed out during the financial crisis.