Investment firm: Lloyds share plan 'disgraceful and patronising'

Investment firm Hargreaves Lansdown (LSE: HL.L - news) has written to the Prime Minister to object to the withdrawal of plans which would have allowed individual investors to purchase shares in Lloyds Bank.

Chancellor Philip Hammond announced last week that remaining shares held by the Government in the bank, worth £3.6bn, would be offloaded to City institutions rather than put on sale to individual investors in a retail sale.

The Treasury pointed to market volatility as the reason for the change, but Hargreaves Lansdown CEO Ian Gorham says that investors are well aware of the impact markets have on share values and are happy to take the risk.

"We urge the Government that a rethink would be a victory for common sense," Mr Gorham said.

"Money from taxpaying working people bailed out Lloyds Plc. Not giving them the opportunity to participate in its sale is disgraceful and patronising."

The Government paid £20.3bn to bail out Lloyds Banking Group (Other OTC: LLOBF - news) during the financial crisis, and owned 43% of the business.

But the Treasury under George Osborne had been gradually returning the company to private ownership through the sale of shares to institutions.

Mr Osborne announced last year that £2bn worth of the remaining shares would be opened up in a retail sale to allow individual investors to purchase them, but this plan was put on hold thanks to the market uncertainty in the run-up to the EU referendum in June, before being scrapped entirely last week.

In his letter to Theresa May, Mr Gorham said that his firm had been contacted by 374,000 separate investors expressing interest in the sale, and that to withdraw the opportunity was a sign that the Government was willing to put the interests of City institutions ahead of the interests of taxpayers.

The process of returning the remaining shares to the private sector is expected to be completed in the next 12 months and should raise enough money to recoup the Government's original investment in the bank.