LONDON (Alliance News) - The UK government will aim to sell another GBP9 billion worth of Lloyds Banking Group PLC shares in the coming fiscal year, continuing the bailed-out lender's return to full private ownership, Chancellor of the Exchequer George Osborne told lawmakers on Wednesday.
"We will sell at least a further GBP9 billion of Lloyds shares in the coming year," Osborne said in his 2015 Budget speech.
Osborne set out his intention after receiving a letter from James Leigh-Pemberton, the executive chairman of UK Financial Investments, the body that manages the government's stakes in the bank assets it acquired after providing support to lenders in the financial crisis of 2007-09.
UKFI also cleared the way for Osborne to reveal Wednesday that he plans to launch a major sale of GBP13 billion of mortgage assets still held by the government from failed lenders Northern Rock and Bradford and Bingley during the crisis.
Leigh-Pemberton wrote in the letter dated last Friday: "My judgement is that the sale of around GBP9 billion worth of Lloyds shares in fiscal year 15/16 would be achievable while delivering value for money for the taxpayer, subject to market conditions and sufficient flexibility on the appropriate time and method of disposal,"
Pemberton wrote that Lloyds' return to paying dividends, together with the European Central Bank's quantitative easing programme, have helped to create "favourable sentiment" and a "very helpful" backdrop for share disposals.
The government still owns about 22.98% of Lloyds Banking Group, having slowly reduced its stake from more than 40% after pumping GBP20 billion into the bank during the financial crisis. It is currently dripping shares onto the market through a trading plan managed by Morgan Stanley.
Lloyds restarted dividends with a 0.75 payment to shareholders for 2014, which it announced in February when the bank reported a GBP1.8 billion pretax profit in 2014, compared with a GBP415 million pretax profit in the prior year.
Lloyds shares were down 0.3% at 79.24 pence on Wednesday afternoon.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
Copyright 2015 Alliance News Limited. All Rights Reserved.
Lloyds (LLOY)