UK government may divest entire stake in Lloyds banking group: reports

The UK government could divest its entire £18.4-billion stake in the Lloyds banking group in 2014, according to The Daily Telegraph, which cited unnamed sources.

According to the newspaper the government holding in its entirety could be sold off in the next 12 months in a combination of retail and institutional offerings.

The newspaper cited a source as saying, post-results was when a further institutional offering would make most sense. The source added, after that, the thinking was an autumn sale, combining an institutional and a retail segment, was a realistic prospect.

The UK government had already divested 6 per cent of its stake in the partly nationalised bank, raising over £3.2 billion in September this year (See: UK government to sell 6% stake in Lloyds Banking Group).

Around 33 per cent of the bank is currently under the government, five years after Lloyds and rival Royal Bank of Scotland were bailed out by the government at the height of the credit crunch.

Shares in Lloyds closed at 78.84 pence on the London Stock Exchange yesterday, valuing group at £56.5 billion.

In September 2013, the government sold a nearly 6 per cent stake, representing 4,282,034,109 shares of the bank's ordinary shares, for £3.2 billion.

The disposal of the proposed stake would allow  the UK government to recover a part of the £21 billion taxpayers' money, infused in Lloyds during the financial crisis of 2008.

According to the sources, buoyed by the earlier successful sale, the government could announce a possible sale of the balance stake, most probably with the publication of the bank's full-year financial results on 13 February 2014.

Meanwhile, UK Financial Investments (UKFI), which manages the government's stakes in Lloyds and Royal Bank of Scotland (RBS), is said is considering different alternatives for the next sale of Lloyds shares.

The report quoted a Treasury spokesman as saying the government would sell further stakes in Lloyds when it was in taxpayers' interest to do so. He added, there was no fixed timetable to do this.