The government is to drip-feed Lloyds shares to the market over the coming six months, cutting its stake in the bailed-out bank bit-by-bit ahead of the election.
As much as £3bn of shares could be sold under the scheme.
The investment bankers who are handling the sale could normally expect to make millions of pounds from the deal. But this time Morgan Stanley has agreed to take a payment of just a single pound.
This follows the trend on the sell-down of the Lloyds’ stock, with investment banks accepting the good publicity as payment.
The government has ordered Morgan Stanley to sell only when the share price is above 73.6p, the average price paid when the government rescued the bank.
And the flow of shares will be limited to no more than 15 per cent of the total trades in the shares over the whole six-month period, to avoid distorting the market.
Assuming the share price stays above that level – it closed last night at 75.35p – then the government could sell shares amounting to more than five per cent of the bank.
It could bring in £2.5bn to £3bn for the Treasury, and cut the taxpayers’ stake to around 20 per cent.
Previous sales of Lloyds shares have raised £7.4bn so far.