Government sells another 1% of Lloyds shares

Zacks lowered shares of Lloyds Banking Group PLC from a “hold” rating to a “sell” rating in a research note on Tuesday, August 18th.

It added that all sales are used to reduce the nation debt, and that a trading plan will end no later than 31 December 2015.

The government has now raised £15 billion by reducing its stake from 43% to the 11.98% it stands at now.

The Treasury has said it won’t sell shares if they dip below 73.6 pence, the value it assigns to the bailout price. To avoid collapse in the financial crisis in October 2008, the banking group needed over £20bn of taxpayer’s money.

The price paid for the last 1 per cent sale was not disclosed, but at market prices it is worth around £500million.

Chancellor George Osborne said it was “fantastic news”, although there are concerns that he is rushing to sell off state-backed lenders at the taxpayers’ expense.

This means the government’s total shareholding in the banking group is now below 12 per cent. The finance ministry began selling off its stake in September 2013, but the pace of divestment has quickened after the government’s appointment of Morgan Stanley in December 2014.

But the pace of the sell-off slowed in August, partly because trading volumes in the market are lower and the investment bankers have been told not to swamp the market with stock, but also because the share price has fallen back. Furthermore, there will be a discounted retail offer to the man on the street later on this year or more likely in the first half of 2016, returning Lloyds completely to the private sector. Lloyds shares have dipped below that level several times this week amid a global stock slump, and closed yesterday at 73.84 pence.

Chief executive Antonio Horta-Osorio said in July that Lloyds was on course to be fully privatised over the next year.

“This reflects the hard work undertaken over the last four years to transform the group into a simple, low risk and customer-focused bank that is committed to helping Britain prosper”.