U.K. Government Cuts Lloyds Stake, Prepares RBS for Another Sale

UK LLOYDS BANK
Photographer: Chris Ratcliffe/Bloomberg
  • Treasury sells $768 million Lloyds shares to reduce its stake
  • RBS applying to convert 'B' shares ahead of government sale

The British government cut its stake in Lloyds Banking Group Plc by about 500 million pounds ($768 million) and paved the way for selling more shares in Royal Bank of Scotland Group Plc as Chancellor George Osborne seeks to exit both holdings.

The Treasury’s latest disposal of Lloyds shares reduced its stake in Britain’s largest mortgage lender to 10.97 percent, according to a statement on Friday. Separately, RBS applied to convert 51 billion B shares into ordinary stock, a change that won’t affect earnings and has no impact on the government’s 72.9 percent stake, the Edinburgh-based lender said in a statement.

Osborne has recouped about 15.5 billion pounds from selling Lloyds shares to institutional investors and sold a 2.1 billion-pound stake in RBS at a loss in August. He pledged on Monday to offer Lloyds shares to individuals at a discount as the government moves to fully exit its stake in the bank over the coming months. At 45.5 billion pounds, the bailout of RBS was the world’s most expensive during the financial crisis.

“It’s fantastic news that we’ve sold more shares in Lloyds,” Osborne said in an e-mailed statement. “I am determined to build on this success by making Lloyds shares available to the public next spring.”

Lloyds shares rose 0.4 percent to 76.57 pence at 9:30 a.m. in London, while RBS advanced 0.6 percent to 332.80 pence.

The conversion of RBS’s B shares into ordinary stock is a “mere technicality in the immediate term,” according to Ian Gordon, an analyst at Investec Plc in London, who has a buy recommendation on the lender. The B shares were created as part of the bailout.

“But some may see it as advance preparation ahead of further placements,” he said.

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