LONDON - The British government announced on Monday that it is selling part of its stake in the Lloyds Banking Group.
The decision to sell 6 percent of the bank’s shares comes five years after Lloyds received a multibillion-dollar bailout from taxpayers and is an effort to take advantage of the firm’s improving fortunes since the financial crisis.
The share sale, valued at 3.2 billion pounds, or $5.1 billion, at Lloyds’ current share price, would reduce the British government’s holding in the bank to 33 percent from about 39 percent.
Analysts expect United Kingdom Financial Investments, the British agency in charge of managing the holdings in the country’s bailed-out banks, to progressively sell down its stakes in both Lloyds and Royal Bank of Scotland over the coming years.
George Osbourne, the chancellor of the exchequer, announced earlier this year that the government was considering reducing its stake in Lloyds, which has benefited from Britain’s improving economy.
The share sale would represent a victory for the current British government and allow local taxpayers to profit from Lloyds’s return to profitability. The proceeds would mirror similar returns that the United States government has garnered after bailing out some of its largest financial institutions during the crisis.
Lloyds, whose share price has risen 93 percent over the last 12 months, has shed many of its so-called noncore assets and has refocused on lending to British customers. The bank’s second-quarter profit more than doubled, to $2.1 billion, and its current share price is above the 74 pence-a-share break-even price that the British government paid for its original holding. Lloyds’ shares rose just less than 1 percent, to 77.36 pence, by the close of trading in London on Monday.
Many analysts have set a 100 pence target price for Lloyds, whose fortunes contrast with those of Royal Bank of Scotland, which continues to suffer from a bloated balance sheet and several changes to its senior management. British taxpayers own an 81 percent stake in the bank.
“I am pleased that the government has been able to begin the process of selling its stake and give taxpayers the opportunity to get their money back,†the chief executive of LLoyds, Antonio Horta-Osorio, said in a statement.
United Kingdom Financial Investments did not disclose on Monday the price of the share offering, which will be started on Monday. The British agency said it would not sell shares in Lloyds again for at least 90 days after the sale was completed.
Earlier on Monday, United Kingdom Financial Investments announced that James Leigh Pemberton, the chief executive of Credit Suisse’s British business, would take charge of the agency next month.
He will succeed Jim O’Neil, formerly of Bank of America Merrill Lynch, who announced in April that he was stepping down from the role to return the American bank.
Bank of America Merrill Lynch, JPMorgan and UBS will manage the share sale, while Lazard and the law firm Slaughter & May are advising United Kingdom Financial Investments on the deal.
