July 17, 2009 / 9:34 AM / 11 years ago

Government opens bank stake sales

LONDON (Reuters) - Britain on Friday asked investment banks to submit proposals to assist it with the sale of its stakes in Royal Bank of Scotland and Lloyds Banking Group.

A Royal Bank of Scotland branch is seen, in central London February 21, 2009. Britain on Friday asked investment banks to submit proposals to assist it with the sale of its stakes in Royal Bank of Scotland and Lloyds Banking Group. REUTERS/Luke MacGregor

UK Financial Investments, the body managing Britain’s holdings in banks, said it was not currently planning any transactions, but when it does it will choose from a shortlist of pre-qualified banks.

Credit Suisse and Citigroup have been the main advisers to the UK government on its bank rescue plans, but most major rivals are likely to be interested.

The process, effectively a “beauty parade” of investment banks for what could be lucrative business, requires banks to submit interest by July 30 to qualify for the shortlist.

UKFI said it will repeat the pre-qualification process annually.

SERIES OF SALES

UKFI said on Monday it will need several years to sell its 70 percent stake in RBS and its 43 percent holding in Lloyds but refused to set a precise timescale.

Britain pumped 37 billion pounds into the two banks to stop them from collapsing late last year, and its loss on the two holdings stands at 10.9 billion pounds.

The government plans to offload the shares through a protracted series of sales into markets.

The sales process could start within a year, and options include placing shares with institutional investors, offers to retail investors, structured transactions such as an exchangeable bond offer, or repurchases by the banks themselves.

Britain has paid 11.5 million pounds of fees to investment bankers for help on banks this year, up from 7.1 million last year, the Treasury said on Friday.

Credit Suisse was paid 9.6 million pounds and Citigroup got 1.9 million pounds in the first half of 2009. Last year’s fees were paid to Goldman Sachs, Morgan Stanley and Deutsche Bank.

Most of this year’s work has been related to valuing 585 billion pounds of assets held by RBS and Lloyds that will be put into a government-backed asset protection scheme, and those fees will be charged to RBS and Lloyds, a Treasury spokesman said.

Editing by Jason Neely

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