UK recovery milestone as state sells 6pc stake in Lloyds bank
Britain could have sold the 6pc stake in banking group Lloyds it placed with investment institutions nearly three times over, sources said yesterday, raising the prospect that the UK could sell all its shares before the 2015 general election.
The £3.2bn (€3.8bn) divestment, five years after Lloyds and Ulster Bank parent Royal Bank of Scotland were bailed out at the height of the credit crunch with a combined £66bn of taxpayers' cash, represents a milestone in the economy's recovery.
The sale of the Lloyds stake has long been a priority for the Conservative-led coalition government.
"This is another step in the long journey in putting right what went so badly wrong in the British economy," Finance Minister George Osborne said. "It's another step in repairing the banks, it's another step in getting the money back for the taxpayer, and it's another step in reducing our national debt."
The shares were sold to unnamed investment institutions at 75 pence per share, a 3pc discount to Lloyds' closing price on Monday. Sources with direct knowledge of the transaction said it was 2.8 times covered by demand.
The level of investor appetite suggests the rest of the Lloyds shares could be sold by the next election, Investec analyst Ian Gordon said. "It appears credible to suggest that it could yet be out in full by the election."
The sale, carried out after Monday's UK stock market close, comes two weeks before the Conservative annual conference and could allow Mr Osborne to drive home the message that he is cleaning up the financial mess which they are keen to blame on the then-ruling Labour Party.
While polls forecast Labour will win a majority at the 2015 election, surveys show the Conservatives are more trusted by the public on handling the economy.
The Treasury has agreed not to sell any more shares in the bank for 90 days and bankers and investors don't expect a second sale until after Lloyds publishes its 2012 results next March. (Reuters)