Privatisation of Lloyds begins as state sells 6% stake

Five years after the government bailouts, taxpayers are set to  recoup more than £3bn

The starting gun on the privatisation of Britain’s state-backed banks was finally fired last night, nearly five years after the first multi-billion pound bailout.

Some 6 per cent of Lloyds Banking Group was sold to institutional investors at what is believed to have been a relatively tight discount to the 77.36p closing price on Monday night. At that closing price the sale would bring in £3.3bn.

During the bailouts the previous Labour government bought the shares at an average of 73.6p, but George Osborne, the Chancellor, has stated that he regards “break even” as 61p.

That is the average market price of the shares when the state bought in –the difference has already being added to the national debt.

“We want to get the best value for the taxpayer, maximise support for the economy and restore the banks to private ownership. The Government will only conclude a sale if these objectives are met,” a Treasury spokesman said.

Despite the sale only representing  6 per cent of Lloyds, it still represents a huge privatisation, bigger than the expected market value of Royal Mail.

However, even after the sale, which was announced after the stock market closed, taxpayers will still hold around a third of the shares.

Nonetheless, disposal will have a powerful symbolic value. The Government and the City are now at least in sight of the end of one of the sorriest episodes in the banking industry’s history, which has seen £66bn of taxpayer’s cash pumped  into the industry as direct aid to  keep Lloyds and Royal Bank of Scotland afloat, together with billions more in indirect support.

Some estimates have put the  total at something close to £1trn.  In contrast, the privatisation will represent a feather in the cap of Antonio Horta-Osorio, the Portuguese chief executive of Lloyds who has overseen a revival of the bank.

Up until now most of the news surrounding Lloyds has been dominated by the enforced spin off of TSB to create a new “challenger” bank, the price demanded by EU watchdogs for the aid Lloyds has received. Mr Horta-Osorio, said: “I am pleased that the Government has been able to begin the process of selling its stake, and giving taxpayers the opportunity to get their money back. I believe this reflects the hard work undertaken over the last two years to make Lloyds a safe and profitable bank that is focused on supporting the UK economy.”

Matthew Fell, the CBI’s director for competitive markets, said: “The move to return Lloyds to the market is good news for investors and customers, and is testament to the successful recent management of the group.

“A Lloyds that can focus on serving the customer free from state ownership will help support the recovery.” 

The sale will raise hopes that Lloyds will be able to resume paying dividends by the end of the year. To do this, the bank will need to negotiate the removal of the Government’s dividend blocker, which will likely involve a fee.

UKFI said it had agreed not to sell any more shares in the bank for 90 days. JP Morgan, Bank of America Merrill Lynch, and UBS handled the sale.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
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: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

39.8 degrees recorded on Tube

There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

Computerised cooking is coming

From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

Jessie Cave's feminist cartoons

The Harry Potter star tells Alice Jones how a one-night stand changed her life
Football Beyond Borders: Even the most distruptive pupils score at homework club

Education: Football Beyond Borders

Add football to an after-school homework club, and even the naughtiest boys can score
10 best barbecue books

Fire up the barbie: 10 best barbecue books

We've got Bibles to get you grilling and smoking like a true south American pro
Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

Nick Bollettieri's Wimbledon Files

Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

‘This is one of the best McLaren teams ever – we are going to do it’

Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most