The UK government has lowered the bar for a reprivatisation of Lloyds Banking Group, suggesting that it would sell its stake in Britain’s biggest lender for as little as 61p – rather than the 74p previously mooted – and still book a profit in the national accounts.
The figure, which emerged as part of a bonus plan for the bank’s chief executive, is less than 8p above yesterday’s closing share price.
Analysts believe the lower hurdle could allow the government to start selling its shares far sooner than expected. “It is feasible that Lloyds’ share price could go above 61p within 12 months,” Citigroup analysts said.
The idea of an early reprivatisation of Lloyds comes a day after Royal Bank of Scotland said a sale of the government’s 82 per cent RBS shareholding was “coming much closer”.
Treasury officials have sought to play down the idea of a timetable for the bank sell-offs. But bankers said the government had suggested the “fiscal in-price” for its 39 per cent Lloyds shareholding be used as one of the chief executive’s bonus targets, as part of a political strategy to pave the way for a sale well ahead of the 2015 general election.
They said 61p represented the level at which the stake was carried in the government’s books, as opposed to the 74p at which the £20 billion (€23 billion) bailout of the bank took place. The equivalent figure for RBS is 410p, compared with the real “in-price” of 500p. RBS shares closed yesterday at 314p.
The news came as Lloyds reported a £570 million pretax loss for 2012, after setting aside yet another £1.5 billion to cover payment protection insurance mis-selling, taking its total provisions for this to £6.8 billion. – (Copyright The Financial Times Limited 2013)
