LONDON (Alliance News) - The UK's Conservative party on Sunday confirmed plans to allow retail investors to buy up to GBP4 billion worth of shares in Lloyds Banking Group PLC if the party wins the country's upcoming general election.
Writing in the Sunday Telegraph, Chancellor George Osborne said the retail offer would be launched within one year of the election and include a loyalty bonus of one share for every ten held for a year to encourage people to adopt a long-term approach to ownership.
Various UK press reports said the shares would be sold at discounted market prices.
Lloyds Banking Group, which required a GBP20 billion state bailout in the midst of the global financial crisis of 2007-09, is being gradually returned to private ownership. Chancellor Osborne has previously set out plans to offload GBP9 billion of the shares over the current year.
The state's stake has been narrowed down to 21.99%, having once held the equivalent to 43% of the bank's shares. But to date all of the shares disposed of have been sold to institutional investors.
In coalition with the Liberal Democrats, the Conservatives' ability to reduce the taxpayer's stake in Lloyds has been helped by the bank earlier this year restarted dividend payments at 0.75 pence per share after it reported a GBP1.8 billion pretax profit for 2014.
Speaking to the BBC, Prime Minister David Cameron said that returning the bank to the private sector would help to pay down the national debt and give people in the country the ability to own shares in "healthy, successful British banks".
However, the plans were scrutinised by both the Labour Party and the Liberal Democrats.
Labour's Shadow Chancellor Ed Balls told Sky News that he wants both Lloyds and Royal Bank of Scotland Group PLC returned to the private sector. Unlike Lloyds, the return of RBS to the private sector is yet to begin and the state still owns about 80% of the bank.
"Of course the public should be buying shares. I want to make sure we maximise the long-term benefit to the Treasury," Balls said.
Pointing to the coalition government's initial public offering of Royal Mail, which received widespread criticism as being underpriced, Balls said that selling the shares to secure value for the taxpayer was of vital importance in returning of Lloyds to the private sector.
Meanwhile, the Liberal Democrats' Vince Cable told Sky News that an ongoing competition inquiry into retail banking could undermine the Conservatives' plans.
The final report of the Competition and Markets Authority's investigation into personal current account and small business banking is due in April 2016, according to a timetable available on its website.
The outcome of the investigation could have big ramifications for Lloyds, due to the way it dominates the UK high street alongside Barclays, HSBC Bank and RBS, together making the 'Big Four' lenders.
According to Sky News, Cable said that a discounted sale "would effectively involve the taxpayer giving a subsidy to a small number of private investors".
By Samuel Agini; samagini@alliancenews.com; @samuelagini
Copyright 2015 Alliance News Limited. All Rights Reserved.
Barclays (BARC)
Lloyds (LLOY)
HSBC Holdings (HSBA)
