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Govt may have to scrap Lloyds share sale

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The Government may have slow down or scrap its current sale of Lloyds Banking Group shares in order to ensure there is stock left for a retail offering next year.

UK Financial Investments, which manages the Government’s banking stakes, is carrying out profitable sales in Lloyds shares by slowing releasing them to the market.

But the Telegraph reports people close to the process believe this may have to come to an early end due to the current pace of the share sales.

Since Lloyds Banking Group was bailed out in 2008, the Government stake in the bank has dropped from 43.4 per cent to 15 per cent.

Morgan Stanley, which is running the share sales, has been releasing shares when Lloyds’ share price was above the break even point of 73.6p. Lloyds shares currently stand at over 85p, making the sales more frequent.

One source told the newspaper: “At some point he [George Osborne] will have to put a lid on the trading plan. It depends how big a chunk of stock he needs to keep for the retail sale – he could get away with a small one, maybe 4pc.

“He is building a bit of profit every time he knocks out a percentage point, so he can say, now we’ll give some back either on retail offer of Lloyds, or on a loss-making RBS sale”

Another source said the Treasury cannot interfere directly with the sale process. They said: “They can only choose to stop it, or to extend it as they did in June.”

The Chancellor is planning to offer Lloyds shares to retail investors early next year. The retail offer has been likened to the “tell Sid” 1986 advertising campaign for British Gas shares.

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