UK To Sell 6% Stake In Lloyds Banking Group

(RTTNews) - The U.K. government plans to sell a 6 percent stake in British lender Lloyds Banking Group Plc (LYG, LLOY.L) through a placing to institutional investors, UK Financial Investments Ltd. or UKFI said Monday. The stake is valued at 3.31 billion pounds or $5.26 billion, based on Lloyd's closing stock price on Monday.

UKFI, which manages the British government's stake in Lloyds as well as Royal Bank of Scotland Group Plc (RBS, RBS.L), had in June 2013 invited offers from banks to manage the sale of its holdings in the two financial companies.

The stake sale will reduce the government's stake in Lloyds to 32.7 percent from the 38.7 percent that it currently holds. The UKFI and the Treasury have undertaken to the joint bookrunners not to sell further shares in the company for a period of 90 calendar days following completion of the placing.

UKFI noted that the placing is expected to comprise 4.28 billion of Lloyd's common shares. The price at which the shares will be sold will be determined by an accelerated bookbuilding process. UKFI said that the book will open with immediate effect following the announcement.

BofA Merrill Lynch, J.P. Morgan Cazenove and UBS Investment Bank have been appointed to act as joint bookrunners in connection with the placing.

The British government is selling part of the 38.7 percent stake that it has been holding in Lloyds since it bailed out the banking group following the bank's troubled takeover of HBOS during the 2008 financial crisis. Lloyds has been grappling with tough times after its merger with HBOS.

Meanwhile, Royal Bank of Scotland was rescued by means of a 45 billion pounds bailout in 2008, following its ill-timed purchase of Dutch bank ABN Amro. The British government currently holds an 81 percent stake in RBS.

UK Chancellor of the Exchequer George Osborne said in June 2013 that the first sale of the government's stake in Lloyds is likely to be an institutional one. However, for subsequent disposals the government will consider all options, including a retail offering to the general public.

In early August, Lloyds reported a turnaround to profit in the first half of fiscal 2013, as total income climbed with a sharp rise in trading income. The results also reflected a decline in costs and impairments. The company reported a profit before tax of 2.13 billion pounds for the first half, compared to a loss of 456 million pounds in the previous year.

LLOY.L closed Monday's trading on the London Stock Exchange at 77.36 pence, up 0.75 pence or 0.98 percent on a volume of 127.51 million shares.