Britain's finance ministry has raised 500 million pounds ($769 million) through the sale of a further one percent stake in Lloyds Banking Group, cutting its holding to below 24 percent. The sale moves Lloyds another step towards a full return to private ownership after Britain pumped 20 billion pounds into the bank during the financial crisis of 2007 to 2009, leaving it with a 41 percent shareholding.
"This is further progress in returning Lloyds Banking Group to private ownership, reducing our national debt and getting taxpayers' money back," Britain's finance minister George Osborne said in a statement on Monday. UK Financial Investments (UKFI), which manages the government's stakes in bailed out banks, hired Morgan Stanley in December to sell Lloyds shares on the stock market through a "pre-arranged trading plan".
The sales since made by Morgan Stanley, all at a price above the 73.6 pence average price that the government paid, have taken the government's stake down to 23.9 percent from 24.9 percent when the trading plan was launched. They also take the total amount raised by the government so far from selling down its stake in Lloyds to just under 8 billion pounds. Lloyds shares traded 0.8 percent higher at 78.60p at 0815 GMT on Monday. Lloyds is expected to announce its first dividend since its rescue on Friday, increasing the bank's appeal to investors and making it easier for the government to offload its remaining shares. Prior to its bailout, Lloyds had a record of being one of the highest dividend paying stocks in Britain, handing over half its profit to shareholders in 2005 and 2006.
UKFI had previously raised 7.4 billion pounds through two separate sales to financial institutions such as pension funds and insurers. Those sales were made using an 'accelerated bookbuild' with the shares sold overnight while the stock market was closed.
In contrast, Morgan Stanley is seller smaller amounts of shares on the open market and has been mandated to continue to do so until the end of June. After that, industry sources said UKFI could look to make another larger sale to institutions or offer shares to private retail investors.
A sale of shares in Britain's other bailed-out bank Royal Bank of Scotland is unlikely in the next two years, the sources said. Shares in RBS are trading well below the price the government bought them at, leaving taxpayers sitting on a loss of nearly 10 billion pounds.