The U.K. government sold a 4.2 billion-pound ($6.95 billion) stake in Lloyds Banking Group Plc (LLOY), its second disposal since rescuing the lender in the financial crisis.
The government sold the shares to money managers for 75.5 pence apiece, 4.6 percent less than yesterday’s closing price, U.K. Financial Investments Ltd., which oversees the government’s stake in the bank, said in a statement today. The sale cuts the U.K.’s stake in Lloyds to less than 25 percent from 33 percent.
Chancellor of the Exchequer George Osborne, constrained by the biggest austerity program since World War II, could use the proceeds from the offerings to fund tax cuts or more spending before the next general election, due in 2015.
“The sale has secured further value for the taxpayer and will be used to pay down the national debt,” the Treasury said in a statement. “It is part of the government’s long term economic plan to build a stronger and safer banking sector.”
The U.K. last sold a 3.2 billion-pound holding, about 6 percent of Britain’s biggest mortgage lender, to money managers in September. The shares were sold for 75 pence each.
The stock fell 4.9 percent to 75.20 pence in London trading today. That’s still above the 61 pence price at which the government says it will break even after providing a 20 billion-pound rescue in 2008.
Bank of America Corp., JPMorgan Chase & Co., Morgan Stanley and UBS AG managed the offering. Lazard acted as capital-markets adviser. The government has agreed not to sell any more shares for 90 days following the disposal.
This week’s sale may be followed in coming months by the first offering of Lloyds shares to individual investors. Lloyds Chief Executive Officer Antonio Horta-Osorio said last month he will ask regulators in the second half for permission to restart dividend payments, the lender’s first since 2008.
The Treasury said in December it plans to give taxpayers the opportunity to buy Lloyds shares “when the time is right” after a sale to money managers.
The government still owns 80 percent of Royal Bank of Scotland Group Plc, which received a 45.5 billion-pound bailout during the financial crisis. Osborne said last year Edinburgh-based RBS is still burdened by too many poor assets for the government to start reducing its holding.
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