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Government nets £3.2bn from 'impeccably timed' Lloyds stake sale
by Dylan Lobo on Sep 17, 2013 at 08:02
Shares in Lloyds have started the day in the red as institutions wasted little time in snapping up a 6% stake in the lender put on the market by the government last night.
UK Financial Investments, the agency responsible for managing the state’s interest in bailed out banks, confirmed in announcement to the London Stock Exchange the disposal had been 'successfully completed'.
Around 27.6 million shares were sold off at 75p per share - a 3.1% discount to last night's close - boosting the government's coffers by approximately £3.2 billion. According to public finance records, the stake is registered as 61p a share, meaning the taxpayer made a paper profit of £586 million on the sale.
The disposal reduces its stake in the lender to 32.7%.
Minutes after the opening bell in London, shares in Lloyds were down 1.7% at 76p.
The sale is widely seen as a major milestone in the UK economic recovery after the government was forced to bailout the bank at the height of the credit crunch exactly five years ago.
Fidelity Worldwide Investment European equity head and Lloyds investor Paras Anand underlined the significance of the move in a statement last night.
‘[The] placing is a clear sign of confidence that the bank is well on the road to recovery. Under current management, the bank is a substantially less complex business, and is today centred around strong franchises in retail and corporate lending.’ Anand said.
He also sees it as a possible precursor to the resumption of dividends at the bank.
‘The focus on selling non-core businesses as well as cost reduction has improved the bank’s capital position to a point that it could return to distributing dividends to shareholders in the medium term.
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