Lloyds Bank privatisation begins

Lloyds bank sign The government plans to reduce its stake in Lloyds to 32%

Related Stories

The government's sale of Lloyds Banking Group has begun, with big investors being offered 6% of the bank.

Based on Monday's closing share price, that stake would be worth £3.3bn and the deal will cut the government's stake in Lloyds to 32.7%.

Back in June, the Chancellor of the Exchequer, George Osborne, announced that the government was preparing to sell its stake.

He said that the government wanted to get a good deal for taxpayers.

Start Quote

During the eurozone banking crisis of 2011-12, getting our money back looked an impossibility”

End Quote
Money back?

In a statement the Treasury said: "We want to get the best value for the taxpayer, maximise support for the economy and restore them to private ownership. The government will only conclude a sale if these objectives are met."

Shares in Lloyds closed at 77.36p on Monday.

That is well above the price of 61p that Chancellor George Osborne regards as the break-even level.

During Lloyds' bailout in 2008, the government bought shares at an average price of 73.6p.

The average market price at the time was 61p, so the government booked the difference as a loss and added it to the national debt.

BBC business editor Robert Peston says that based on Monday's share price, the taxpayer should "more or less" get its money back.

He also said: "During the eurozone banking crisis of 2011-12, getting our money back looked an impossibility."

Back in profit

The sale of Lloyds is a big privatisation. The 6% stake is worth more than the expected market value of the entire Royal Mail, which is due to be privatised in the next few weeks.

From today big investors will be able to say how many shares they want of Lloyds and at what price. The government and its advisors will then look at those offers, decide on a price and divide up the available shares.

Lloyds recently revived the TSB brand and has transferred five million accounts to the new bank.

The new bank will be sold off next year, as part of a process ordered by the European Commission to provide greater competition.

In August, Lloyds announced profits of £2.1bn ($3.2bn) in the six months to the end of June, compared with a loss of £456m for the same period last year.

It was helped by a 43% fall in bad debts to £1.8bn, but the group had to make a further £450m charge to its accounts to cover compensation for the mis-selling of payment protection insurance (PPI).

Lloyds also reported that mortgage lending grew to £14.5bn in the first half, up from £12.3bn in the same six months last year.

More on This Story

Related Stories

More Business stories

RSS

BBC Business Live

  1.  
    RUSSIA SANCTIONS 07:51:
    Russia adidas shirt

    European companies say sanctions against Russia are already taking their toll, reports the Financial Times. Adidas shares dropped 15% after its profit warning yesterday - it's closing stores in Russia. Also seeing an impact are Volkswagen and Siemens.

     
  2.  
    DIRECT LINE RESULTS 07:41:
    Dog

    Direct Line is the largest motor insurance group in the country. It reports an 8% rise in six month profits to £225.1m. Brands include Churchill, Privilege and the Green Flag roadside recovery service.

     
  3.  
    IAG PROFITS 07:28: BBC Radio 4

    IAG boss Willie Walsh tells Today the airline group is "doing very well" and is on course to deliver its full year guidance. The conversation quickly turns to safety. British Airways and Iberia have been avoiding Liberian airspace since March, he says. "We don't look at the cost at all. It's simply a case that we look at whether it is safe to fly over an area or not," he adds. "We don't fly over Libya or Syria." But the airline judges that it is now safe to fly over Iraq.

     
  4.  
    IAG PROFITS Breaking News

    British Airways and Iberia Airlines owner International Airlines Croup has swung into profit. It has reported pre-tax profits of 155m euros (£123m) for the last six months, compared with a loss of 177m euros a year earlier.

     
  5.  
    RENTOKIL INITIAL RESULTS 07:10:

    Office services business Rentokil Initial said its half year profits rose 38.9% to £66.8m.

     
  6.  
    US ECONOMY 06:59: Radio 5 live

    More from Terry Savage on the US economy. She says the US Federal Reserve policy of quantitative easing "has created all of this money... and all that money has not gone into, so far at least, good paying jobs or homebuilding. It's gone into the stock market and... made the rich a lot richer."

     
  7.  
    PORTUGAL BANK 06:47: BBC Radio 4
    Woman outside BES

    Bill Blain from Mint Partners tells Today Portugal's government has a tough decision to make on BES: "Does it bail it out as 'too big to fail', or does it stand back and let the bank sort itself out? Many want the debt holders to pay the cost of this."

     
  8.  
    TOUGH MUDDER 06:36:
    Man leaping

    The Today programme likes a natter with a company boss of a Friday morning. Today's is Will Dean from Tough Mudder. People pay him £100 to spend time on an obstacle course - jumping, swimming, crawling through mud and so forth. Why? "It's not a race its a challenge. It's about team work over 12 miles. Its a set of individual challenges to test you mentally and physically." Fine.

     
  9.  
    PORTUGAL BANK 06:28: BBC Radio 4

    Shares in Banco Espirito Santo lost 42% yesterday after the bank announced a loss of 3.6bn euros (£2.8bn). Bill Blain from chief strategist at Mint Partners tells Today this is "Deeply concerning for all bankers looking at Europe. It's [Europe] had 450bn of new capital to sort out the relationship between sovereign debt and the banks. What the Banco results show shows is the bank remained a piggy bank for the family".

     
  10.  
    US ECONOMY 06:15: Radio 5 live

    The US releases jobs data later today - GDP figures earlier this week showed the US economy growing strongly. Expectations are that another 230,000 jobs could have been added to the US economy in July and that the unemployment rate may - we'd stress the may here though - have fallen below 6%.

     
  11.  
    US ECONOMY 06:07: Radio 5 live

    US financial expert and businesswoman Terry Savage tells Wake Up to Money the US economic recovery is still difficult to read: "It's kind of a glass half full/half empty kind of thing. Different parts of the economy have picked up, particularly consumer spending on autos and other big items," she says. "It's not what we would call a booming economy . It's just so much better than what we have had for the last few years."

     
  12.  
    06:01: Rebecca Marston Business reporter, BBC News

    In a short while we'll have results from William Hill and British Airways owner IAG trading updates. And we'll have an eye on everything else that's going on. bizlive@bbc.co.uk @bbcbusiness.

     
  13.  
    06:00: Matthew West Business Reporter

    Morning folks. So what's happened overnight? Well the World Trade Organisation has failed to agree a global customs deal.... again. But manufacturing in China grew at its fastest pace in more than two years in July, according to the latest figures.

     

Features

From BBC Capital

Programmes

  • A woman sits on a bed in a scene from Gustav Deutsch's latest film about Edward Hopper's paintingsTalking Movies Watch

    How film-maker Gustav Deutsch brought Edward Hopper’s paintings to life

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.