Investments  

Gov’t in the black as it raises £3.2bn from Lloyds sale

A return of partly state-owned Lloyds Banking Group is underway in earnest and is set to yield a significant profit for the taxpayer, after the government divested a 6 per cent stake in the lender for a little more than £3.2bn, netting a £60m profit for the taxpayer.

HM Treasury placed around 4.3m ordinary shares at around 75 pence per share, a modest discount to the closing price yesterday (16 September) of 77.4 pence but more than the average 73.6 pence paid when Lloyds was bailed out in 2008. The sale reduces the government’s stake in the bank to 32.7 per cent.

Chancellor George Osborne will claim the sale is a vindication of his approach to returning the bank to the private sector, though a number of members of the former Labour administration will also likely claim success for the handling of the initial bailout.

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Mr Osborne said earlier this year that he would seek to offload shares in Lloyds and RBS by the end of next year.

Fund managers claim the initial sale of taxpayer-owned shares in Lloyds Banking Group shows shareholders can now expect good things from the lender going forward.

Paras Anand, head of European equities at Fidelity Worldwide Investment, said the decision to put a placing price on shares of 75p was a clear sign of confidence that the bank is well on the road to recovery.

He said: “Under current management, the bank is a substantially less complex business, and is today centred around strong franchises in retail and corporate lending.

“The focus on selling non-core businesses as well as cost reduction has improved the bank’s capital position to a point that it could return to distributing dividends to shareholders in the medium term.

“While we expect regulatory uncertainty to hang over the sector, Lloyds should be in a position to deliver a good level of shareholder returns looking forward.”