Overnight, HM Treasury has sold an estimated £600m worth of its shares in Lloyds Banking Group. Through the sale of 734 million shares, the British government has reduced its stake in the bank by one percent to 16.87 percent.
George Osborne…will continue selling shares in Lloyds as quickly as possible
During the financial crisis, Lloyds Bank was rescued by the UK Government at a cost of £20.5bn to taxpayers. Between 2008 and 2009, shares were bought at 63.1p; they were sold yesterday at 87.08p per share, thereby reducing the taxpayer bill to £11.5bn.
The group is celebrating the move, which it sees as a closer step towards total privatisation – a goal it has set for 2016. “Today’s announcement shows the further progress made in returning Lloyds Banking Group to full private ownership and enabling the taxpayer to get their money back,” a Lloyds representative said in a statement, according to the BBC.
The opportunity for the British government to raise capital through Lloyds is ripe given the growing investor interest in the Bank and its rising share price. According to a quarterly statement published by Lloyds Banking Group, its underlying profit for Q1 2015 totalled £2,178m, an increase of 21 percent from the first quarter of 2014. Total income grew by 3 per cent to £4,644m.
Reportedly, Chancellor of the Exchequer, George Osborne, will continue selling shares in Lloyds as quickly as possible over the next year in order to raise capital for the spending plans committed by the incumbent government. Osborne aims to raise around £23bn through the sale of various public sector assets, including the government’s stakes in RBS, the Royal Mail and the student loan book.
