Government’s Lloyds stake sees a profit

City A.M. Reporter
STOCK in Lloyds Banking Group, 41 per cent state-owned, is trading above the government’s average investment per share on at least one measure for the first time since the credit crunch.

Most analysts say a government sell-off is highly unlikely before the general election expected in early May, with parliament expected to be dissolved just after Easter.

But a report yesterday from UK Financial Investments (UKFI), which manages the government’s stakes in wholly and partially nationalised lenders, places the state’s average investment per share in Lloyds as low as 63.2p when fees are included.

That would be below the current share price and at a level likely to revive the debate on whether the government should “test” appetite for shares in bailed-out banks Lloyds and Royal Bank of Scotland soon.

Earlier, chancellor Alistair Darling used his Budget presentation to confirm the government would use the stake sales to recover the billions it ploughed into the banks.

“We will sell our shares in RBS and Lloyds, as well as Northern Rock, in a way that maximises value for the taxpayer and recoups the money we invested,” Darling told parliament.

The Conservative party has also said it would only begin to sell the stakes once the state can make a profit.

UKFI said the government’s total investment in Lloyds is £20.3bn, which includes last year’s £13.5bn rights issue.