U.K. to Sell Lloyds Shares to Individuals Within 12 Months

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U.K. Government Plans Lloyds Retail Offering

The U.K. government said it will sell shares in Lloyds Banking Group Plc to individual investors over the next year as it extended a program to offer stock in the lender to money managers.

The Treasury said Monday it will extend its trading plan to sell shares in the lender by a further six months after it reduced its holding in the bank to less than 19 percent. The government has received more than 10.5 billion pounds under the program, about half what it spent to bail out the bank.

The retail share plan would allow people to buy as little as 250 pounds ($382) of Lloyds shares and earn bonus stock for keeping their investment for more than a year. Prime Minister David Cameron is fulfilling an election promise by the Conservative Party that recalls the privatizations of Margaret Thatcher’s government in the 1980s.

“We’re determined to get on with the job of returning Lloyds to private ownership,” Chancellor of the Exchequer George Osborne said in a statement.

Cameron said during the campaign that he wants to recoup the 20 billion pounds taxpayers spent to bail out the nation’s largest mortgage lender during the financial crisis.

The stock rose 1 percent to 88.66 pence in London on Monday. Under the “measured and orderly” trading plan, run by Morgan Stanley, Lloyds shares aren’t disposed of for less than the 73.6 pence price the government paid in the bailout, and have been sold for an average price of 80 pence so far.

Loyalty Bonus

Osborne said in a Sunday Telegraph article in April that people will be able to buy as little as 250 pounds of Lloyds shares up to a maximum of 10,000 pounds, with priority going to orders of up to 1,000 pounds. The offer would include a “loyalty bonus” giving people who own the stock for a year a free share for each 10 they own, he said.

That plan still stands, according to a Treasury official.

The government sold a stake worth valued at about 627 million pounds at last week’s closing price. U.K. Financial Investments now owns 13.6 million shares in Lloyds, according to a statement Monday, down from 14.2 million shares in a previous filing May 20, when the stake fell below 20 percent.

Lloyds Chief Executive Officer Antonio Horta-Osorio returned the lender to its first annual profit in five years in 2014, and also won approval to resume dividend payments.

While the government is prepping to sell its stake in Lloyds, shares of Royal Bank of Scotland Group Plc are still trading for the less the price the government originally paid for them.

The lender could pay as much as $4.5 billion to resolve claims of misconduct in its handling of U.S. mortgage securities, according to Bloomberg Intelligence. A settlement could come as early as the end of this year, according to RBS Chief Executive Officer Ross McEwan.

Osborne could use his annual address to bankers in the City of London next week to signal his intention to reduce the government’s stake, according to people with knowledge of his thinking who asked not to be identified. The Financial Times reported Osborne’s intended comments earlier on Monday.

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