Exclusive: UK may extend trading plan to sell more Lloyds shares

Fri May 15, 2015 10:44am EDT
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By Matt Scuffham

LONDON (Reuters) - Britain is considering selling more shares in Lloyds Banking Group (LLOY.L: Quote) by extending a trading facility beyond the current deadline at the end of June, people with knowledge of the matter said.

Morgan Stanley (MS.N: Quote) has sold a 5 percent stake in Lloyds since December through a "pre-arranged trading plan" that it was asked to undertake by UK Financial Investments (UKFI), the government agency which manages Britain's stakes in bailed-out banks.

The government's stake has been cut to 19.9 percent from 24.9 percent through the plan, which has so far raised over 2.5 billion pounds ($3.95 billion) for taxpayers. An extension could help the government to return Lloyds fully to private ownership in the next year.

The trading plan is due to end on June 30 but may be prolonged to accelerate the government's exit.

The process, known as a "dribble out", allowed Morgan Stanley to undertake regular sales of the shares provided they were sold above the government's 73.6 pence buy-in price and the sales didn't exceed 15 percent of overall trading volumes.

It effectively allowed the government to continue selling shares in Lloyds in the run-up to this month's election without facing accusations that the sales were politically motivated.

Finance Minister George Osborne said in March that he wanted to sell at least 9 billion pounds worth of stock in Lloyds over the next year. In addition to the trading plan, the government plans to sell a chunk of shares to private retail investors, potentially raising around 4 billion pounds.

Since the March announcement, the value of shares in the bank have risen by 12 percent, enabling the government to sell them at a significant profit. Lloyds Chairman Norman Blackwell said on Thursday it was possible and desirable for Lloyds to return to full private ownership in the next year.   Continued...

A pedestrian is seen passing the head office of the Lloyds Banking Group in central London in this August 5, 2009 file photograph.    REUTERS/Stefan Wermuth/Files