UK government to sell remaining 12% stake in Lloyds

HM Treasury revealed on Monday that the UK government plans to divest the rest of its stake in Lloyds Banking Group, with the launch of a retail sale of Lloyds shares in spring 2016.

The government intends to fully exit from its Lloyds shareholding in the coming months and has said that at least GBP2bn of shares will be sold to retail investors as part of the divestment, with applications available online and by post.

Lloyds shares will be offered to members of the public, with a discount of 5% of the market price and a bonus share for every ten shares for those who hold their investment for more than a year. Priority will be given to those who apply for an investment of less than GBP1,000. The value of the bonus share incentive will be capped at GBP200 per investor. Also, military personnel and their spouses stationed overseas will be able to apply to buy the shares, where possible, which is in line with the government’s armed forces covenant that ensures that members of the armed forces should not face disadvantage in the provision of public services.

Proceeds from the sale of Lloyds shares are used to pay down the national debt.

According to the BBC news website, Chancellor George Osborne has described the sale as the biggest privatisation in the UK for more than 20 years.

Osborne was quoted as saying: “I don’t want all those shares to go to City institutions – I want them to go to members of the public”.

Lloyds was bailed out by the government at the height of the financial crisis in 2008, when the Treasury spent GBP20.5bn on a 43% stake in the banking group. Almost three-quarters of public funds used to rescue the bank have been recouped by the Treasury, which has sold the shares to institutional investors.