March 24, 2010 / 6:23 PM / 10 years ago

Lloyds shares at cost of govt investment

LONDON (Reuters) - Stock in Lloyds Banking Group, 41 percent state-owned, is trading above the government’s average investment per share on at least one measure for the first time since the credit crunch.

A pedestrian passes the head office of the Lloyds Banking Group in central London August 5, 2009 file photo. REUTERS/Stefan Wermuth

Most analysts say a government sell-off is highly unlikely before a general election expected in early May, with Britain’s parliament expected to be dissolved just after Easter.

But a report Wednesday from UK Financial Investments, which manages the government’s stakes in wholly and partially nationalised lenders, places the state’s average investment per share in Lloyds as low as 63.2p when fees are included.

That would be below the current share price and at a level analysts say is likely to revive the debate on whether the government should “test” appetite for shares in bailed-out banks Lloyds and Royal Bank of Scotland soon.

Earlier Wednesday, finance minister Alistair Darling used his budget presentation to confirm the government would use the stake sales to recover billions it ploughed into the banks.

“We will sell our shares in RBS and Lloyds, as well as Northern Rock, in a way that maximises value for the taxpayer and recoups the money we invested,” Darling told parliament.

The opposition Conservative party has also said it would only begin to sell once the state can make a profit.

UKFI said the government’s total investment in Lloyds is 20.3 billion pounds including last year’s bumper rights issue, or 73.6 pence per share.

Net of fees, however — including a 2.5 billion pound fee the government received when the bank sidestepped a state-backed insurance scheme for bad debts — the investment level slips to just 63.2p per share.

Lloyds, whose shares have risen around 15.5 percent since it surprised the market Friday with news it now expects to return to profit this year, closed at 64.2p Thursday.

UKFI put the government’s total investment in Royal Bank of Scotland at 45.5 billion pounds, or 50.2p per share.

Including fees received, that comes down to 45.2 billion, or 49.9p a share, compared with a current share price of 44.5p.

Reporting by Clara Ferreira-Marques, editing by Will Waterman

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below