By Steve Slater and Kylie MacLellan
LONDON, Sept 17 (Reuters) - Prestige, not pay, was the maingoal for banks who completed Europe's biggest equity capitalmarket deal so far this year, in the shape of Britain's sale of3.2 billion pounds ($5 billion) worth of shares in LloydsBanking Group.
The Treasury and UK Financial Investments (UKFI) - whichholds Britain's stakes in Lloyds and Royal Bank of Scotland - did not pay any fees to the banks and advisers whohandled the sale of the 6 percent stake.
JP Morgan Cazenove, which is acting as UKFI'sadviser on its privatisation strategy, was joined by Bank ofAmerica Merrill Lynch and UBS as bookrunnerson the deal. Lazard was capital markets adviser.
Banks see it as prestigious to work on such a high profiledeal and are keen to form good relations with governments.
So fees for government work are typically non-existent orcut to the bone - often as low as 0.1 or 0.2 percent of thetotal deal value, compared with a typical fee of around 0.5percent for a big share placing for a non-government client.
One significant benefit is that banks will get credit onleague tables which rank the performance of firms and arefiercely competitive.
The Lloyds deal lifted JP Morgan and BofA Merrill Lynchabove Morgan Stanley into third and fourth spots,respectively, in the EMEA ECM league tables for the year so far,according to Thomson Reuters data.
UBS retained sixth spot, but widened its lead over nearestrival Citi.
BROKING COMMISSION
Bankers said firms on the deal can also attract more of thefuture flow in trading in a stock to make it worthwhile.
The banks working on the Lloyds sale would have received aslim brokerage commission from buyers of the stock, but theamount, which varies by buyer, is likely to have been less than10 million pounds for all involved.
Despite the low fees, there was tough competition to handlethe Lloyds sale - and any future RBS deal - and all of the biginvestment banking names are on a shortlist to handle deals atshort notice.
Those at JP Morgan involved included Tim Wise, vice-chairmanof JP Morgan Cazenove, Ina De, co-head of UK investment banking,plus Jonathan Wilcox, Manuel Esteve and Piers Davison.
UBS's team included David Soanes, head of corporate clientsolutions for Europe, Middle East and Africa, along with Christopher Smith and Peter Norton,
BofA Merrill Lynch's team included Alex Wilmot-Sitwell,president of Europe, plus Craig Coben and Arif Vohra.
Britain pumped a combined 66 billion pounds into Lloyds andRBS in 2008, leaving it with 39 percent of Lloyds and 81 percentof RBS, and plans to sell down both stakes. Lloyds could befully sold by 2015, but RBS is likely to take years.
"They are not a small seller, they have got plenty to go,"said one banker.
Future share sales or a more complex sale to the publicfurther down the line could garner bigger fees, and even a lowrate of 0.2 percent could earn 130 million pounds from theprivatisations.