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Lloyds share price surge boosts prospect of bailout sale Lloyds share price surge boosts prospect of bailout sale
(4 months later)
Speculation that George Osborne will press ahead with attempts to sell off a stake in the bailed out banks escalated on Friday when shares in Lloyds Banking Group closed above the 61p level the chancellor has set as the price where the taxpayer breaks even.Speculation that George Osborne will press ahead with attempts to sell off a stake in the bailed out banks escalated on Friday when shares in Lloyds Banking Group closed above the 61p level the chancellor has set as the price where the taxpayer breaks even.
Friday's 62.8p closing price would also allow António Horta-Osório, the bank's chief executive, to start receiving a £1.5m bonus if a third of the taxpayer's 39% stake could be sold off at that level.Friday's 62.8p closing price would also allow António Horta-Osório, the bank's chief executive, to start receiving a £1.5m bonus if a third of the taxpayer's 39% stake could be sold off at that level.
The target price was introduced in March, causing speculation that the Treasury was preparing to sell off the stake – bought for over £20bn – at less than the 72.3p City analysts had previously believed was a break-even position on the stake.The target price was introduced in March, causing speculation that the Treasury was preparing to sell off the stake – bought for over £20bn – at less than the 72.3p City analysts had previously believed was a break-even position on the stake.
The rise in the shares followed comments by the bank on Thursday that it was on course for profitability and paying a dividend to shareholders by the end of the year.The rise in the shares followed comments by the bank on Thursday that it was on course for profitability and paying a dividend to shareholders by the end of the year.
Ian Gordon, banks analyst at Investec, said the share sell-off could begin this year. "Having missed the chance to sell some of its stake in September 2010 when the shares peaked at 77p – and subsequently collapsed to 21p by November 2011, it would be prudent to commence a disposal without delay," said Gordon.Ian Gordon, banks analyst at Investec, said the share sell-off could begin this year. "Having missed the chance to sell some of its stake in September 2010 when the shares peaked at 77p – and subsequently collapsed to 21p by November 2011, it would be prudent to commence a disposal without delay," said Gordon.
"The government investment was £20.3bn, and, given current frothy market conditions, I believe it would be entirely credible to look to place, say, an initial £2bn tranche.""The government investment was £20.3bn, and, given current frothy market conditions, I believe it would be entirely credible to look to place, say, an initial £2bn tranche."
The chancellor has yet to outline any specific strategy to dispose of the Lloyds stake – or the 81% holding in Royal Bank of Scotland, whose shares were the biggest riser in the FTSE 100 on Friday with a 5% jump to 336p.The chancellor has yet to outline any specific strategy to dispose of the Lloyds stake – or the 81% holding in Royal Bank of Scotland, whose shares were the biggest riser in the FTSE 100 on Friday with a 5% jump to 336p.
A Treasury spokesperson said: "The government will return Lloyds Banking Group fully to the private sector when it is in the interests of the taxpayer to do so."A Treasury spokesperson said: "The government will return Lloyds Banking Group fully to the private sector when it is in the interests of the taxpayer to do so."
The 61p figure is based on the price that Lloyds shares were trading at on the day the government bought its stakes, rather than the actual price paid. The equivalent price for RBS is 407p, compared with the 502p actually paid for the shares.The 61p figure is based on the price that Lloyds shares were trading at on the day the government bought its stakes, rather than the actual price paid. The equivalent price for RBS is 407p, compared with the 502p actually paid for the shares.
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