News Column

Business analysis: Lloyds Banking Group: The government will not be selling off shares before the election, says Nils Pratley

August 14, 2014

Nils Pratley

Don't all rush at once. In fact, don't rush at all. There is no chance of flogging any Lloyds Banking Group shares to retail punters before next year's general election, the Treasury has conceded. It's all too complicated at the moment.

Well, yes, the official explanations for delay are powerful. A window for a sale, as investment bankers put it, is hard to spot. There is the Scottish referendum next month and Lloyds is big in Scotland. Then European and UK regulators will conduct their stress tests on banks, with results due in November and December. That's a bit close to Christmas, so one might have to wait for Lloyds' full-year financial results in February. But perhaps the election in May would make the politics tricky.

But then there are the unofficial reasons, which are the clincher. Lloyds' share price is currently in a rut at 74p-ish. Since the last sales were struck at 75p and 75.5p, there is little prospect currently of achieving a higher sale price for a slug of the state's remaining 25% holding.

Retail investors will also require a discount to invest as anybody can already buy in the market. Lloyds would probably have to be trading at 85p-plus today to deliver the Treasury's preferred smooth sale. Given the possibility of an accident, delay was chancellor George Osborne's only option.

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Source: Guardian (UK)

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