Rapid sale of 10% of Lloyds mooted

 
Chancellor at Lloyds cashpoint

The Treasury has received approaches from a series of sovereign wealth funds and private-equity businesses to buy around 10% of Lloyds, either just before or simultaneous with a more conventional placing of shares with investment institutions, I have learned.

Sources close to the Chancellor tell me George Osborne hasn't ruled out such a deal, which could be worth around £5bn, but would only do it if persuaded that the transaction represents conspicuous value for money for the taxpayer.

"There is a Gordon Brown`s gold issue here," said a source, referring to the criticism that dogged the former chancellor Gordon Brown that he sold too much of Britain's gold reserves too cheaply.

The Treasury is therefore looking for any buyer of the stake to pay a premium to the market price, which at the time of writing is 66p.

"Based on today's price, if someone offered 70p, we'd have to be interested" said a source.

'Rip off'

Start Quote

If we do a deal with one of these sovereign wealth or private equity firms, we need complete transparency on what we are selling and the price. Most of those buyers don't like that transparency”

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However another source said some of the bidders wanted a discount to the market price.

Also a large number of them did not want to buy the shares as shares, but wanted them repackaged into convertible bonds, similar to the method Barclays used to raise money from the Middle East after the crash of 2008.

"It would be a mistake to sell the shares in the form of bonds or in any way than in their plain vanilla form" said another source. "Anything that looks like complicated financial engineering would raise suspicions that the Treasury is being ripped off, and those suspicions would probably be right."

Another adviser to Mr Osborne said: "If we do a deal with one of these sovereign wealth or private equity firms, we need complete transparency on what we are selling and the price. Most of those buyers don't like that transparency. They are looking for a bargain, and want to hide the true commercial nature of the transaction through a complex structure."

Quick

If in the end a deal can be reached with a powerful state investor, such as the sovereign wealth funds of Norway or Singapore, or with a consortium of private equity investors, such as those put together in other contexts by Corsair, it could happen relatively quickly.

Sources have told me that such a transaction could take place not long after the summer - but would not give odds on it actually happening.

In his Mansion House speech to the City last month, the Chancellor gave the green light to the first stage of the privatisation of the Treasury's 39% stake in Lloyds, signalling that it would be initiated by a large placing of shares with mainstream investment institutions rather than retail investors, probably before the end of the year - so long as Lloyds' share price continues to rise.

 
Robert Peston, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    +2

    Comment number 26.

    25.w

    They see banks they own and profit from that we, not they, will rescue if (when?) required.

  • rate this
    +5

    Comment number 25.

    What do these sovereign wealth investing countries see in buying shares of one of our banks that HMG does not? Long term gains?

  • rate this
    -11

    Comment number 24.

    People on this blog think that Lloyds or RBS are worth something, they are not, we all know they are insolvent. So it's merely a case of asset stripping then folding the rest into bancruptcy.
    The Treasury should take anything they can get and let the buyer beware!

  • rate this
    +3

    Comment number 23.

    Gordon Brown sold about 395 Tons (yes Tons) of Gold between 1999 and 2002. At an average price of $275.
    It raised $3.5 Billion, at the top of the market he'd have got $19 Billion. Realistically the sale could have raised five or six Billion more than he did by handling the sale better.

    Why did no one say anything at the time?

  • rate this
    +7

    Comment number 22.

    Most of those buyers don't like that transparency. They are looking for a bargain, and want to hide the true commercial nature of the transaction through a complex structure."

    This is the problem whats the matter with transparency, just shows what the financial sector is, a bunch of greedy crooks looking for further illicit gains, it stinks. !!!

  • rate this
    -1

    Comment number 21.

    Tis the silly season.

    Anything goes. Carney lauded as a saviour - as the markets bomb.

    Sell off a bit of the governments - OUR - stake in Lloyds.

    And why not. The silly season is in full spate.

    Bit of sunshine even. -

    Siemens Quadrilla Morsi Nobody will notice what is going on.

    And that is merely off the BBC.

    Silliness reigns

    And that is before Python.

    Sill

    Just about everywhere.....

  • rate this
    -2

    Comment number 20.

    11: How much of that sale was due to the crisis in supply of physical Gold ?

  • rate this
    +1

    Comment number 19.

    Why the rush ?
    Why not trickle the Treasury's stake onto the Market as prices become advantageous?

  • rate this
    +4

    Comment number 18.

    'would raise suspicions that the Treasury is being ripped off, and those suspicions would probably be right.'
    too right.
    what 10%
    what about existing shareholders being ripped off yet again.
    just tip anything of worth in the UK into the pockets of private equity.
    the private equity investors will then leverage the deal with an RBS loan thus NEVER paying any tax on any profit!

  • rate this
    0

    Comment number 17.

    Sources have told me
    /
    They will do it given half a chance.
    Any way to reduce the national debt no matter whether they will short change the tax payer who bailed them out in the first place.
    Politicians, who are only interested in gaining capital out of short term decisions are in reality ripping off the tax payer and brazenly as such.
    Is anyone taken in any more by this.

  • rate this
    +6

    Comment number 16.

    Let's face it. This is just about selling as much as possible so they can claim that the books are as they said they are going to be.

    Rather than take tough and unpopular decisions with the electorate, who continue to seem to want to vote themselves free money at every opportunity, we are scrambling around finding small change down the back of the sofa to try to make the books add up.

  • rate this
    -1

    Comment number 15.

    9, where do you get your fantastic figures from?
    the cost of the banks is no where near that, If sold at current prices gov would be in a small profit on Lloyds, RBS is anybodies guess but somewhere in the 20 bill behind

  • rate this
    +5

    Comment number 14.

    "Sources", "Sources", more "Sources", oh, and "Advisers"...

    Umm, not many "facts" being reported here...

  • rate this
    +1

    Comment number 13.

    as soon as we sell the shares, they will sky rocket.. the rich know what they are doing, and we will be shafted! ... this will end in alot of anger.I think the best thing to do, is make the bank start paying the gov diverdends untill the private sector says... ok we shall play fair.
    These people know how to fool people, they make you belive that something is bad, buy low, sell high

  • rate this
    +1

    Comment number 12.

    8.Baal
    When countries allow private banks to offer intrest rates above the level of taxation, its clear who runs the country.
    ===
    The banksters are in charge. The politicians are not the real government, merely glove puppets to the CoL. To allude that democracy not an illusion is to demonstrate delusion.
    They should have head hunted JfH to be Head of BofE, they went to the old GS network.

  • rate this
    +4

    Comment number 11.

    So instead of waiting to get the best price LATER the Govt. just want to get enough cash in now to stop the recent RISE in the deficit, undermining their economic "strategy" as is it.....



    .....now, what did they say 1 months after it turned out that Gordon Brown had sold the reserve gold at a market low point....????


    Tory Govt. = complete & utter hypocrisy.......

  • rate this
    0

    Comment number 10.

    "Sources have told me that such a transaction could take place not long after the summer - but would not give odds on it actually happening"

    Odd. Haven't they started a book yet?

    Gamblers.

  • rate this
    -1

    Comment number 9.

    If we can sell these and RBS's for the real total equivalent cost of the bailout which will is c£1200bn (I include all costs) then that will just about cover the wreckage caused by the bankster leeches.

    Anyone think that is going to happen. Anybody?

  • rate this
    0

    Comment number 8.

    our political parties are always willing to sell us the voters out for any chance of pleasing the rich, powerful and elite, I still think they all belive that UK should be sold of at the lowest price to people that just want to take all our money, When countries allow private banks to offer intrest rates above the level of taxation, its clear who runs the country.

  • rate this
    +4

    Comment number 7.

    Like Gordon Brown before him George Osbourne has Britain up for sale and has no regard for the future of our youth we are a land run by foriegners & where a few Brits like Osbourne get rich.

 

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