LONDON â€" The British government plans to reduce sharply its stake in the Lloyds Banking Group, another sign of the strengthening of the financial sector here.
Lloyds, a British lender, received a bailout of 17 billion pounds, or about $28 billion, from the British government during the financial crisis.
On Tuesday, U.K. Financial Investments, which manages the government’s holdings in Lloyds and the Royal Bank of Scotland, said it would to sell 5.35 billion of the shares it holds in Lloyds, or about 7.5 percent, in a placement with institutional investors. Based on Tuesday’s closing stock price, the sale would be worth nearly $7 billion. The sale will reduce the government’s stake in Lloyds to about 25 percent from about 32.7 percent.
Reducing the British government’s holdings in Lloyds and R.B.S. has been a priority for George Osborne, the chancellor of the Exchequer.
The government previously sold 6 percent of its holdings in Lloyds in September. The government holds about 81 percent of the Royal Bank of Scotland.
The latest sale comes as Lloyds’ has improved its results despite continuing legacy issues, such as the sale of payment protection insurance, a product that has cost the bank billions of pounds. (The bank took a £3.46 billion charge in the fourth quarter to compensate consumers wrongly sold the product.)
In 2013, Lloyds posted a loss of £838 million, compared with a loss of £1.47 billion in the prior year. Also In 2013, Lloyds posted a statutory profit of £445 million, an important measure for the lender. It was the lender’s first statutory profit since 2010.
“We’re becoming a normal bank again,†said António Horta-Osório, the Lloyds chief executive while announcing the bank’s full-year results last month.
Bank of America Merrill Lynch, JPMorgan Chase, Morgan Stanley and UBS will act as book-runners on the share sale. Lazard is acting as capital markets adviser on the placement.
