UK hires adviser over future of Ulster Bank's parent Lloyds
The UK government is looking at the future of Ulster Bank's parent and is considering selling as much as £5bn (€5.8bn) of Lloyds shares as a first step to reducing its holding in the bank, sources said yesterday.
David Cameron's government yesterday hired JPMorgan Chase to advise on a strategy for returning Lloyds and Ulster Bank parent Royal Bank of Scotland Group to private investors. It also shortlisted 11 banks as potential bookrunners for a stock offering.
The government's decision on which banks from the group will manage a sale will be based mainly on fees, the sources said.
The UK coalition is weighing whether to sell 5pc to 10pc of Lloyds to money managers as soon as September, the sources added. The initial transaction would be a test of appetite for a further offering of shares to institutional and individual investors, the insiders said.
"This is essentially a privatisation, and governments have always been tough on fees," said Philip Keevil, a partner at New York-based Compass Partners.
"It's a huge deal and carries not only league table credits but also bragging rights.
"The firms that get the business will dominate the equity league tables for the year, which they presumably hope will lead to more private sector business with better fees," he said.
Clients in Europe, the Middle East and Africa paid on average about 2pc of the value of a sale in fees in secondary stock offerings in Europe this year, according to data compiled by Bloomberg.
JPMorgan is the ninth-ranked underwriter of such offerings in Europe this year, the data show.
The bank, whose senior advisers include former British prime minister Tony Blair, isn't charging the government a fee for its advisory work, another person with knowledge of the talks said.
Kate Haywood, a JPMorgan spokeswoman in London, declined to comment on Mr Blair's involvement or the fees the firm is charging.