The Government has committed to selling its shares of Lloyds Banking Group to the retail sector and to returning its stake to the private sector in 2016/17, it was announced in the Budget today.
Chancellor George Osborne had been expected to sell £2bn of discounted Lloyds shares to retail investors in February, but the sale was postponed due to poor market conditions. The share price is currently 69.1p, below the 73.6p paid by the Government in 2009.
“The government is committed to returning the financial sector assets acquired in 2008/09 to the private sector,” Osborne said. “As there is no longer a policy need for the Government to hold these assets, it will seek to dispose of them, reducing [public sector net debt] while maximising value for taxpayers.”
According to the Budget report, the Government has recovered more than £75bn since 2010, which includes about £7.5bn through the continuation of the Lloyds Banking Group trading plan.
“UK taxpayers’ money was used to bail out the banks, so it is right to give the public the opportunity to invest in Lloyds Banking Group,” Osborne said.
Russ Mould, investment director at AJ Bell, says: “While the Government’s intent to get out of the market in an orderly fashion remains as it was, the firmness of the timetable is new. It shows the government is keen to press on as best it can without a disorderly market.”
He adds: “There is an investment case developing for Lloyds; it is an old style of utility bank that is not growing quickly but is attractive over the long term.”
After the share sale was postponed last month, Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “It now seems unlikely the deal will resurface again before the Brexit vote, given the market volatility we could see as we approach the referendum date.”