Lloyds will be completely privately owned by May as the UK government is disposing off it shares
Published By: Eunice Gettys on January 30, 2017 11:49 am EST
Lloyds Banking Group PLC (ADR) (NYSE:LYG) is getting closer to private ownership as the UK Government stake drops below 5% at the bank, according to Reuters. The British bank has delayed its transfer of ownership in the past year due to market turbulence.
On Monday, UK Financial Investment (UKFI) announced that it reduced its stake by 1% to 4.998%. UKFI is a limited company managed by the UK Government. It manages holdings on behalf of the treasury with aim to protect and value the taxpayer as a shareholder.
Over the next few months, the bank is expected to be completely private owned. UKFI is expected to sell 1% of share every three weeks on average. Therefore, at the current rate, by May 2017, Lloyds will be completely privately owned.
UKFI continued to sell shares from October last year. Prior to that, due to uncertainty in the markets the transfer of ownership was halted. Events like Brexit shook the financial markets in 2016, which later recovered. In a low growth and low interest rate environment, investors are expected to remain cautious of the economy.
It is important to know that Lloyds was bailed out by the taxpayer’s money by 20.5 billion pounds during the crisis in 2008. At that time, the UK Government was left with 43% stake at the bank. Since then, Lloyds has been trying to put crisis behind them and improve their financial position. Lloyds is expected to buy the credit card business, MBNA from Bank of America (BAC) at 1.9 billion pounds. That will be Lloyds first acquisition since the financial crisis.
The UK Government also holds over 70% shares at Royal Bank of Scotland, which is also hit by charges and scandals. The stock price has been impacted and the government looks to delay the selling of ownership at the moment