Shares in Lloyds Banking Group hit UK government break-even price

Shares in state-backed Lloyds Banking Group rose above the level that the UK government sees as its break-even price after its £20.5 billion rescue of the bank, raising hopes of a sale this year.

Lloyds shares, the top performer in the FTSE-100 last year, rose 2.5 per cent to reach 62.5 pence at noon on Friday, their highest for more than two years and passing the 61.2 pence break-even price.

Although the UK government has not yet set a timetable for a sale, industry sources and analysts have said it wants to start selling when the shares are trading consistently above 61.2 pence a share.

Any sale would be handled by UK Financial Investments (UKFI), which manages the government’s shares in Lloyds and Royal Bank of Scotland.

UKFI has a number of options for offloading the shares, which it is likely to sell in small portions. A placing with institutions would not require a prospectus to be written and could be completed quickly. However, if the government wanted to sell some of the shares to members of the public, it would need to create a full prospectus, which would take one or two months to complete, UKFI has said in the past.

It could also look at a structured transaction in which shares are sold at a future date at a predetermined premium to the current share price.– (Reuters)