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U.K. Said to Rule Out Pre-Election Lloyds Retail Offering

Aug. 13 (Bloomberg) -- The British government is unlikely to sell shares in Lloyds Banking Group Plc to individual investors ahead of general elections in May 2015, two people familiar with the matter said.

The Treasury sees stock market conditions, stress tests by the Bank of England later this year and a vote on Scottish independence next month as obstacles to a retail offering, said one of the people who asked not to be identified because the matter is private. A share sale to institutional investors is still an option, according to the people.

Chancellor of the Exchequer George Osborne, facing voters after almost five years in office, is looking to return Britain’s largest mortgage lender to private ownership after it received a bailout from taxpayers in the financial crisis. The government last sold a stake in March, raising 4.2 billion pounds ($7 billion) and cutting its stake to 25 percent.

“We want to maximize support for the British economy, get the best value for money for the taxpayer and return the state-owned banks to private ownership,” Treasury said in an e-mailed statement today. “Any decision on share sales will be determined by value for money and market conditions.”

The shares rose 0.9 percent to 73.93 pence at 1:28 p.m. in London, below the 75.5 pence price at which the U.K. last sold a stake. While they have dropped 6.3 percent this year, they are above the 61 pence price at which the government says it would break even after providing the 20 billion-pound rescue.

‘All Options’

The government sold a 3.3 billion-pound stake in the lender to money managers in September, cutting its stake to 33 percent from 39 percent. The U.K. still owns 80 percent of Royal Bank of Scotland Group Plc after a bailout.

Osborne, 43, said in a September letter to Andrew Tyrie, chairman of the Treasury Select Committee, that he would consider “all options” for the Lloyds stake including a retail offering to the general public.

The London-based bank last month reported a 32 percent gain in underlying pretax profit in the first half, beating analyst estimates. Chief Executive Officer Antonio Horta-Osorio said he plans to apply to the Bank of England in the second half of the year for permission to resume dividend payments, which have been suspended since the bank’s bailout in 2008.

Sky News first reported Osborne had ruled out a pre-election sale.

To contact the reporters on this story: Richard Partington in London at rpartington@bloomberg.net; Thomas Penny in London at tpenny@bloomberg.net

To contact the editors responsible for this story: Simone Meier at smeier@bloomberg.net; Alan Crawford at acrawford6@bloomberg.net

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