U.K. Government to Restart Sale of Its Lloyds Banking Group Stake -- Update
October 07 2016 - 10:30AM
Dow Jones News
By Max Colchester and Jason Douglas
LONDON--The U.K. government said Friday it will restart the
privatization of Lloyds Banking Group PLC (LLOY.LN) by drip selling
shares into the market.
The British Treasury, which owns a 9.1% stake in Lloyds
following a bailout in 2009, said in a statement that it had
ditched a plan to sell its stake via a retail offering to members
of the public. Instead Morgan Stanley (MS) will be appointed to
slowly sell the shares over the next 12 months.
"I have listened to the experts. Ongoing market volatility means
it is not the right time for a retail offer," U.K. Chancellor of
the Exchequer Philip Hammond said in a statement.
Unlike a previous plan to sell down the stake, Mr. Hammond
didn't pledge to sell the shares above the price the government
paid for them. Lloyds shares currently trade at 53 pence, well
below the average 73 pence buy-in price paid by British taxpayers.
Following the June Brexit vote, Lloyds's shares lost a quarter of
their value, raising questions about whether the Treasury would
exit the bank soon.
So far the Treasury has recouped around GPB16.9 billion ($21.4
billion) from previous Lloyds share sales. British taxpayers pumped
just over GBP20 billion into the lender to save it from collapse
during the financial crisis. In a statement Lloyds welcomed the
Treasury's decision.
More complex is the prospect of recovering part of the GBP45.5
billion that was pumped into Royal Bank of Scotland Group PLC
(RBS.LN) during the crisis. On Friday Mr. Hammond dismissed the
idea of a quick sale of its 73% stake in RBS.
"It is clear that disposal of the RBS shares at a price that
recovers taxpayers' investment is not practical at the moment," he
said during a visit to the U.S.
The bank will first have to settle allegations around the sale
of toxic mortgage-backed securities with the Department of Justice
and then dispose of its Williams & Glyn retail unit before any
privatization proceeds, Mr. Hammond added.
Write to Max Colchester at max.colchester@wsj.com and Jason
Douglas at jason.douglas@wsj.com
(END) Dow Jones Newswires
October 07, 2016 10:15 ET (14:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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