Osborne fires gun on Lloyds retail share sale

George Osborne

George Osborne

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Shares in taxpayer-backed Lloyds Banking Group will be made available to retail investors in the spring, Chancellor George Osborne has announced.

Some £2 billion worth of shares will be up for grabs and will be sold at a 5 per cent discount to the market price.

In a bid to avoid wealthier investors snapping up the lot, anyone applying for less than £1,000 worth will be prioritised.

Investors will also be awarded a bonus share for every 10 purchased if they hold their investment for more than a year. The bonus share incentive will be capped at £200 per investor.

The Government pumped more than £20 billion into Lloyds in a bid to prop up the bank in the midst of the financial collapse.

It has been gradually selling shares off to institutional investors, but this marks the first chance for the general public to get involved.

Speaking on ITV1’s Good Morning Britain, Mr Osborne said of the sale: “We are selling Lloyds shares to members of the public, people watching this programme, small investors, people who are going to have a chance to get something back having put all that money in under the last Labour government.”

All proceeds from the sale of the Halifax owner will be used to pay down the national debt.

Releasing more details of the sale, the Treasury said military personnel stationed overseas and their spouses would be able to participate, where possible.

“There will be a nationwide TV, print and digital information campaign to provide further details ahead of the sale,” it said. “This will outline the next steps for people who wish to apply for shares.”

Those interested in buying shares can receive updates when more details become available about the sale, by visiting the following page and entering their email address https://www.gov.uk/lloydsshares

When the sale is opened to the public, investors will be able to apply either online or by post.

The Government has so far recouped £15 billion of the £20.5 billion it spent rescuing Lloyds, and currently owns just under 12 per cent of the bank.

Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers, said: “The buoyant interest in this share sale will only now accelerate with the terms firmly on the table.

“Based on the current share price, the £2 billion sale equates to a 3.6 per cent stake, as compared to the 39 per cent stake the Government held before they began the disposal programme and is part of the 11.98 per cent stake which remains.

“In addition, the 5 per cent discount is equivalent to just 3.8p per share, whilst the sale overall is light even of the Royal Mail IPO, which weighed in at around £3.3 billion.

“Nonetheless, it does provide a welcome opportunity for smaller investors to at least participate in a fraction of the sell-off, in what is currently a well-regarded bank, seen as something of a barometer for the UK economy.

“With a projected dividend yield which could nudge 4 per cent and interest rates remaining in the doldrums, you can see this being of interest to income seeking investors in the current environment.

“The market consensus of Lloyds is a buy could comfort those looking to pick up some shares.”

Keith Loudon, senior partner at Redmayne-Bentley, said: “The news today that Lloyds Bank is to be denationalised brought a smile from older investors who remember the halcyon days when there was a denationalisation and a demutualisation nearly every week.

“The initial announcement states that shares will be offered at five per cent below the market price at the time of issue.

“The private investors’ mouths will water at the news that if the public retains the shares for a year, there will be a ‘one for ten’ bonus. Is this a return to the good old days?”

Shares rose 1.84 per cent this morning to 77.95 pence.