Osborne: Lloyds sale will target public next

Retail investors were barred from first float but are key to full nationalisation plan

Ordinary investors are set to be handed the chance to participate in the second round sell-off of Lloyds Banking Group shares.

It follows the Government's successful sale of a £3.2bn tranche of stock, representing 6 per cent of Lloyds shares and 15 per cent of the Government's stake.

Institutions have already warned the Government not to go too quickly with future sales, for fear of flooding the market with stock, which would depress the price for the new investors as well as longer-term holders.

However, bringing in retail investors could help. The Government's setting of 61p as the minimum price to secure a "profit" would also allow it to sell to them at a larger discount than the institutions, who paid 75p for their shares in Monday's placing, a discount of just 3 per cent to the 77.36p at which the shares closed on Monday night.

Lloyds shares are on the Government's books at 61p because that was the average price at which they were trading when the previous government bought in at 73.6p. The successful sale at 75p therefore technically cut the national debt by £586m, although the actual profit was just over £60m.

The markets sounded a cautionary note yesterday, with Lloyds shares closing trading down 2.71p at 74.65p, meaning the new investors were at a loss just hours after buying in.

The Government still holds nearly a third of Lloyds and such is the size of its stake that it has little choice but to proceed in stages. A single round of the staged sell-off could easily eclipse all past public privatisations, including the sales of British Gas and BT by the Thatcher government.

However, getting retail investors involved would greatly help with demand. Yesterday the Chancellor, George Osborne, wrote to Andrew Tyrie, the chairman of the Treasury Select Committee, to say that he was "considering options" for future sales including "a retail offering to the general public".

Despite the doubts in some parts of the City, the sell-off still drew a broadly positive response. Ian Gordon, an analyst at Investec, said: "We regard the Government's timing as impeccable, and it appears credible to suggest that it could yet be out in full by the election."

David Buik, a City commentator at stockbroker Panmure Gordon, said: "We understand that the shares were 2.8 per cent over-subscribed with many of them landing in US hands, which I found interesting. I suppose it is fair to say that fortunes have already been made on the recovery of US banks; so it's the UK's turn."

The Government is technically now barred from any further share sale for 90 days under a deal signed with the banks which acted as underwriters, although it could ask them to drop this.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
news
Arts and Entertainment
British author Helen Macdonald, pictured with Costa book of the year, 'H is for Hawk'
booksPanel hail Helen Macdonald's 'brilliantly written, muscular prose' in memoir of a grief-stricken daughter who became obsessed with training a goshawk
Sport
footballLive blog: Follow the action from the Capital One Cup semi-final
Life and Style
food + drink
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Homeless Veterans appeal: Homeless in Wales can find inspiration from Daniel’s story

Homeless Veterans appeal

Homeless in Wales can find inspiration from Daniel’s story
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century