Taxpayer stake in Lloyds Banking Group falls below 9%

https://www.theguardian.com/business/2016/oct/27/taxpayer-stake-in-lloyds-banking-group-falls

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The taxpayer stake in Lloyds Banking Group has fallen below 9% after Philip Hammond sanctioned a further sale even though the shares are trading below the average paid by the taxpayer during the 2008 bailout.

The reduction was announced to the market the day after the bank said it was taking another £1bn charge for payment protection insurance misselling which knocked its profit in the third quarter of the year.

The chancellor announced this month that he was abandoning his predecessor’s plan to offer the public cut-price shares in Lloyds and would instead sell the remaining stake on the stock market at prices below the 73.6p average price taxpayers paid for their stake.

Lloyds shares were trading at 56p on Thursday ,prmomg, well below that average price, although the Treasury argues that it will not make a loss on the overall sale because of the profit made on selling off shares earlier.

At its peak, the taxpayer stake stood at 43% when £20bn was pumped into the bank. Some £17bn has been received by the exchequer.

Hammond said: “Selling our shares in Lloyds and making sure that we get back all the cash taxpayers injected into it during the financial crisis is one of my top priorities as chancellor.”

The decision to abandon the retail offering to the public – a key pledge made by George Osborne – has infuriated some of the brokers hoping to handle the sale. Hargreaves Lansdown has set up a petition asking the government to reconsider the decision.

“Rather than engage with working taxpayers willing to invest in our economy, the government has favoured city institutions,” said Ian Gorham, chief executive of Hargreaves Lansdown.

The disposal of the stake began in September 2013 when £3.2bn of shares were sold at 75p to institutional investors. In March 2014, a further £4.2bn tranche was sold at 75.5p and in December 2014 the chancellor began to dribble shares into the market as long as the level was above 73.6p. Hammond has now signalled that shares can be sold below this break even price. The Treasury has to inform the market of share sales only when it falls through one percentage point thresholds.