* UKFI reviewed options, got timing right - watchdog
* 230 mln stg shortfall was cost of financial stability -NAO
By Matt Scuffham
LONDON, Dec 18 (Reuters) - The government's first sale ofshares in Lloyds Banking Group was managed effectivelyand provided value for money, Britain's public spending watchdogsaid on Wednesday.
The endorsement of the sale process by Britain's NationalAudit Office (NAO) may influence the Conservative-led coalitionas it ponders how best to offload its remaining 33 percentstake. It wants to return Lloyds to full private ownership bythe time of the next election in 2015.
The government raised 3.2 billion pounds ($5.20 billion)through the sale of a 6 percent stake in the bank in September.It saw the disposal as a milestone in the country's recoveryfrom the 2008 financial crisis during which taxpayers pumped acombined 66 billion pounds ($107 billion) into Lloyds and RoyalBank of Scotland.
The shares were sold to financial institutions such aspension funds and insurers via an 'accelerated bookbuild' -enabling the shares to be placed in the period between themarket closing and re-opening the following day.
Amyas Morse, head of the National Audit Office (NAO), saidthat UK Financial Investments (UKFI), which managed the sale forBritain's Finance Ministry, had reviewed its options thoroughlyand got its timing right.
"The sale took place when the shares were trading close to a12-month high and at the upper end of estimates for the fairvalue of the business. Furthermore, the share price in tradingafter the sale has remained steady," Morse said.
The government, which retained 33 percent of the bank, soldthe shares at 75 pence per share, above the 73.6 pence at whichthey were purchased. But taking account of the cost of borrowingthe money to buy the shares, taxpayers had lost at least 230million pounds, the watchdog said.
It said that loss should be see as part of the cost ofsecuring financial stability during the crisis, rather than anyreflection on the sale process.
UKFI agreed to a lock-in which prevented it from selling anymore shares in Lloyds for at least 90 days, which is due toexpire on Wednesday. It is not expected to sell any more sharesuntil after the bank's full-year results in February.
The government is also considering selling some of theremaining shares to private retail investors.
Shares in Lloyds closed on Tuesday at 76.2 pence, valuingthe government's remaining shares at close to 18 billion pounds.