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Bailed out Lloyds re-privatisation starts

Bailed out Lloyds re-privatisation starts
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Financial analysts and the British government have been toasting the success of the part re-privatisation of Lloyds Banking Group.

The first sale of taxpayer-owned shares raised the equivalent of 3.2 billion pounds (3.8 billion euros) and marked a milestone in the UK economy’s recovery from the 2008 financial crisis.

Profit for the government was a modest 61 billion pounds (73 million euros), but Jessica Ground, a fund manager with Schroders said that was significant: “It’s very important for the government that they got a profit, and I think it’s very interesting that they only sold 6 per cent and there’s over another 30 per cent to go. So they obviously feel quite confident that things are going to get better.”

There was big demand for the offering and Britain’s Conservative-led coalition government is expected to sell more Lloyds shares in the first half of next year, and some economists think the finance minister will try to make a political point by selling all of its stake before the next election in 2015.

A sale of shares in the other bailed-out bank RBS is seen as much further away. Its shares are still trading at 28 percent below the government’s average buy-in price – meaning taxpayers are sitting on a loss of 13 billion pounds.

Analyst Joseph Dickerson at brokerage Jefferies said the sale “was unequivocally positive” for both Lloyds and RBS.

“The simple manner in which the shares were placed will no doubt be welcomed by investors. We can only hope that the rest of the government’s stake in Lloyds and RBS is disposed of in such an effective manner,” he said.

However, the outlook for RBS is further complicated by the government’s decision to hire investment bank Rothschild to examine whether the bank should be broken up. A decision is expected in the autumn.