Prospects improve for UK sale of Lloyds stake

Thursday, May 16th, 2013 | Finance News

By Matt Scuffham

EDINBURGH (Reuters) - The chances of Britain selling its stake in Lloyds improved during 2012 and the government should be able to start offloading its shares "over time", the bank's chairman told shareholders on Thursday.

Shares in Britain's biggest retail bank are closing in on the 61 pence level which the government regards as its break-even, raising hopes that a sale of its 39 percent shareholding could be imminent.

"2012 has been a year in which that possibility has been enhanced," Win Bischoff said, presiding over the bank's annual meeting for the last time before he retires.

"We remain committed to operating as a wholly privately owned group, which is profitable, self supporting and dividend paying," he added.

Britain pumped 20.5 billion pounds into Lloyds and 45.5 billion euros into rival Royal Bank of Scotland to keep them afloat during the financial crisis.

Industry and political sources have said the government hopes to start selling its stake in Lloyds before the next parliamentary election in 2015, a move seen as more realistic than selling down its 81 percent shareholding in Royal Bank of Scotland, where it is sitting on a paper loss of around 17 billion pounds

Shares in Lloyds hit a two-year high of 60.5 pence on Thursday. Royal Bank of Scotland's stock was up 2.4 percent at 314 pence.

Lloyds is further ahead than Royal Bank of Scotland in the battle to slim down and de-risk in the aftermath of the financial crisis. The banks have shed hundreds of billions of pounds of assets and axed tens of thousands of jobs to cut their dependence on state aid.

Royal Bank of Scotland said on Thursday it was cutting a further 1,400 jobs in the UK over the next two years.

Bischoff said Lloyds hoped to restart dividend payments as soon as possible.

"Once regulatory requirements have been clearly defined and we have prudently met them, and the financial position of the group and market conditions permit, it is our intention to recommence dividend payments," he said.

Britain's financial regulator said in March that UK banks must raise 25 billion pounds of extra capital by the end of the year to absorb any future losses on loans. The regulator has not given specific guidance to banks but analysts expect Lloyds to be one of those banks facing a shortfall.

Bischoff said the bank was waiting to receive guidance from the regulator on its capital position but was confident of its capital strength.

(Reporting by Matt Scuffham. Editing by Carmel Crimmins)

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