Sep 17 2013
Chancellor George Osborne has hailed the taxpayer's £61 million profit on the sale of shares in Lloyds Banking Group as more evidence that the economy is "turning a corner".
Mr Osborne claimed the £3.2 billion sale of a 6% slice of the bank to institutional investors represented a half-billion pound boost to the public accounts - because of the way it is valued on the Government's books.
He indicated that the disposal of the rest of the Treasury's holding, now standing at 32.7%, may be opened up to the public in a stock market float likely to revive memories of the major privatisations of the 1980s.
It comes five years to the day after then-Lloyds TSB stepped in to swallow up troubled Halifax Bank of Scotland during the financial crisis in a disastrous move that saw it needing to be rescued itself in a £20 billion Government bail-out.
The first tranche of the re-privatisation saw financial institutions mainly from the UK and United States snap up stock at a price of 75p per share, above the 73.6p average price that had been paid for it by the Treasury.
In a letter to Andrew Tyrie, chairman of the Commons Treasury Committee, Mr Osborne said: "This is a good outcome for the taxpayer. It represents a major milestone on the road from rescue to recovery for the British economy, and in further normalising the banking sector. This is the first in a multi-staged sale programme. I will consider all options for later sales of our shareholding in Lloyds, including a retail offering to the general public."
The share placing was offered at only a narrow discount and was the second biggest of its kind ever in the UK. It came as shares reached a three-year high of 77.36p on the FTSE 100 index.
Investec analyst Ian Gordon said the Government's timing was "impeccable" and that it was plausible that its whole stake could be sold before the 2015 general election. Mr Osborne hailed a "profit for taxpayers", adding: "The money will be used to reduce the national debt by over half a billion pounds."
The claim relates to the fact that Lloyds banking shares are valued at 61p on the Government books, since the £20.3 billion paid for them has already been reduced by £2.5 billion the bank paid for an asset protection scheme announced in 2009. This leaves the paper profit to be used to pay off the national debt at £586 million - though the Treasury made clear that a decision on whether the figure could be counted as such would have to be made by the Office for National Statistics.
Mr Osborne said: "This is another step in the long journey in putting right what went so badly wrong in the British economy; it's another step in repairing the banks; it's another step in getting the money back for the taxpayer; and it's another step in reducing our national debt. All of those things together are good news. If you look at what has happened over the last 12 hours with Lloyds, you have investors from around the world investing in a British bank. That is a sign the British economy is turning a corner.''