By Max Colchester
LONDON--The U.K. government on Wednesday announced that it would
sell a further chunk of shares in Lloyds Banking Group PLC by the
end of June next year.
Morgan Stanley has been mandated by the U.K. government to sell
the shares at above the average price the taxpayers paid to bail
out the bank during the financial crisis.
The government currently holds a 25% stake in Lloyds. The number
of shares sold under the plan will depend on how the share price
performs between now and the end of June. There is no definitive
target, but Morgan Stanley has been instructed not to sell more
than 15% of the volume of all Lloyds shares traded on the
market.
Based on past trading patterns this could see around GBP3
billion ($4.72 billion) of stock sold, which would take the
government's shareholding in Lloyds down to 20%, according to a
person familiar with the matter.
U.K. Financial Investments Ltd, which manages the stake in the
bank of the government's behalf, decided to mandate Morgan Stanley
a day after Lloyds passed a Bank of England's balance sheet stress
test. Previously UKFI has sold chunks of Lloyds directly to
investors through accelerated placements however officials felt
that it would be better to sell the stock over a longer time frame
to a wider group of investors, according to people familiar with
the sale. Furthermore the British political calendar is busy ahead
of next year's general election, offering few windows for a major
sale.
Morgan Stanley has previously worked on selling down the U.S.
Treasury Department's stake in Citigroup Inc. The U.S. taxpayer
stake in car maker General Motors was sold in a similar manner.
The U.K. government bailed out Lloyds in 2009 following its
shotgun merger with a teetering mortgage lender, taking a 39% stake
in the U.K.'s biggest retail bank. So far, the government has
raised GBP7.4 billion selling bits of its stake in the British
bank. The U.K. government currently owns 17.8 billion ordinary
shares in Lloyds.
Tapan Panchal contributed to this article.
Write to Max Colchester at max.colchester@wsj.com
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