Banks fight to run sale of state stake in Lloyds

Tim Wallace
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UP TO a dozen top investment banks have applied to run the sale of the government’s stakes in Lloyds and RBS, giving UK Financial Investments (UKFI) their bids by yesterday’s closing date.

The government’s 39 per cent stake in Lloyds will go first, with the sale potentially starting in the coming months. It currently looks likely that the state should make a healthy profit on the bank’s bailout.

Each applicant bank will be judged mainly on their experience in similar sales, and the fees they will charge.

Insiders say the selection process could favour Deutsche Bank – the German institution ran the book on the government’s sale of Northern Rock to Virgin Money, and it is understood UKFI was pleased with the work.

The execs who led the team – Tadhg Flood and James Arculus – are still in place, and the bank was involved in the bailout in the financial crisis. But others are also in the running. Morgan Stanley only lost out on the Northern Rock sale due to a clash with other work, while the government has hired Goldman Sachs and UBS to work on the Royal Mail sale. Bank of America Merrill Lynch has also worked with the banks in the past, while Barclays is also in with a chance. The banks involved and UKFI declined to comment.

Lloyds’ shares yesterday rose 3.82 per cent to 67.1p, firmly above the 61p break even level, on increased activity by potential institutional bidders for stakes in the lender.