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Lloyds Bank privatisation begins | Lloyds Bank privatisation begins |
(35 minutes later) | |
The government's sale of Lloyds Banking Group has begun, with big investors being offered 6% of the bank. | |
Based on Monday's closing share price, that stake would be worth £3.3bn and the deal will cut the government's stake in Lloyds to 32.7%. | |
Back in June, the Chancellor of the Exchequer, George Osborne, announced that the government was preparing to sell its stake. | |
He said that the government wanted to get a good deal for taxpayers. | |
Money back? | |
In a statement the Treasury said: "We want to get the best value for the taxpayer, maximise support for the economy and restore them to private ownership. The government will only conclude a sale if these objectives are met." | |
Shares in Lloyds closed at 77.36p on Monday. | Shares in Lloyds closed at 77.36p on Monday. |
That is well above the price of 61p that Chancellor George Osborne regards as the break-even level. | That is well above the price of 61p that Chancellor George Osborne regards as the break-even level. |
During Lloyds' bailout in 2008, the government bought shares at an average price of 73.6p. | |
The average market price at the time was 61p, so the government booked the difference as a loss and added it to the national debt. | The average market price at the time was 61p, so the government booked the difference as a loss and added it to the national debt. |
BBC business editor Robert Peston says that based on Monday's share price, the taxpayer should "more or less" get its money back. | |
He also said: "During the eurozone banking crisis of 2011-12, getting our money back looked an impossibility." | He also said: "During the eurozone banking crisis of 2011-12, getting our money back looked an impossibility." |
The sale of Lloyds is a big privatisation. The 6% stake is worth more than the expected market value of the entire Royal Mail, which is due to be privatised in the next few weeks. | |
Lloyds recently revived the TSB brand and has transferred five million accounts to the new bank. | |
The new bank will be sold off next year, as part of a process ordered by the European Commission to provide greater competition. |