Yahoo Finance Lloyds Stake Sale Raises £3.2bn For Taxpayer
The initial sale of taxpayer-owned shares in Lloyds Banking Group (LSE: LLOY.L - news) has raised £3.21bn for the Treasury - representing a small profit.
UK Financial Investments (UKFI), the body which oversees the public's stakes in Lloyds and RBS (LSE: RBS.L - news) following their bailouts, said 6% of Lloyds Banking Group was sold to institutional investors at a placing price of 75p per share.
It means the taxpayer stake in Lloyds - rescued after its disastrous acquisition of Halifax Bank of Scotland at the height of the financial crisis - has been reduced from 38.7% to 32.7%.
The sale price represents a £61m cash profit on the 73.6p average price paid by the Labour Government in 2008 but it will register as a paper profit of £586m on the Treasury's books because its stake in Lloyds is recorded in the public finances as 61p per share.
The reduced cost took into account the fact that the Treasury had already received £2.5bn for insurance fees from Lloyds under the now-disbanded Asset Protection Scheme.
UKFI confirmed that no further sale of the taxpayer's remaining 32.7% stake would take place for a further 90 days.
The public is expected to be given a chance to buy Lloyds stock in future sales.
Chancellor George Osborne kicked off the initial share sale on Monday night , five years after Lloyds was left needing a £20bn bailout.
He said: "Five years ago the previous government forced British taxpayers to put a huge sum of money into bailing out the banks.
"That was a big ask of the British public. I have been determined ever since I became Chancellor to get that money back for taxpayers.
"I can confirm that we have sold 6% of Lloyds Bank at 75p a share. That is a profit for taxpayers, and rightly so. The money will be used to reduce the national debt by over half a billion pounds.
"This is another step in the long journey in putting right what went so badly wrong in the British economy; it's another step in repairing the banks; it's another step in getting the money back for the taxpayer; and it's another step in reducing our national debt.
"All of those things together are good news.
"If you look at what has happened over the last 12 hours with Lloyds, you have investors from around the world investing in a British bank. That is a sign the British economy is turning a corner."
Lloyds shares were more than 3.2% down in late trading on the FTSE 100 (FTSE: ^FTSE - news) on Tuesday - still changing hands at more than 60% below their pre-financial crisis peak.
Nevertheless, the start of the re-privatisation marks a milestone for Lloyds, which hailed its recovery earlier this summer after swinging out of the red with half-year profits of more than £2bn.
Last week the bank re-launched TSB (KOSDAQ: 045340.KQ - news) with a spin-off of more than 600 branches, which it was obliged to dispose of under European laws on state aid. This is expected to result in a flotation next year.
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