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George Osborne set to reveal Lloyds sell-off plans

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Chancellor George Osborne

Chancellor George Osborne is set to announce plans to begin selling off the Government’s shares in Lloyds Banking Group.

The Sunday Times reports Osborne will use his Mansion House speech on 19 June to reveal how much of the Government’s 39 per cent stake in the bank will be sold off. The Financial Times says the Treasury is considering a sale of 10 per cent of its stake before the end of the year. Estimates suggest the total stake is worth around £17bn. 

Under the plans, the public will be offered discounted Lloyds shares at the same price available to institutional investors such as pension funds and fund managers. The Government also plans to offer incentives for investors to hold on to the shares for the longer-term.

Osborne is also expected to signal a share sell-off in Royal Bank of Scotland, though this may follow after a Lloyds share sale.

It comes as a report by think tank the Policy Exchange, due to be published today, backs the reprivatisation of Lloyds and RBS. The report though calls for the shares to be offered to voters rather than sold, who would then pay a fee on any future gains when they sell the shares. 

The Parliamentary Commission on Banking Standards is holding a private session today and tomorrow to finalise its report on banking reform. It has been suggested one of the recommendations is to split up RBS into a good and bad bank, in the same way as Northern Rock was during the financial crisis.

The FT reports that discussions over the commission’s recommendations over RBS and Lloyds are set to be “heated”. Chairman Andrew Tyrie and former Tory chancellor Lord Lawson, who sits on the commission, are said to be in favour of splitting RBS, but other members such as Labour’s Pat McFadden have said a split would be reckless without knowing the potential cost to the taxpayer. Members of the committee are meeting this week to finalise their recommendations. 

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  1. Timing the market for any investor is folly. For a government it is scandalous and possibly illegal given their ability influence factors such as the banking code which would affect future profitability.

    Sell it. Crystallise the loss and get Lloyds and eventually RBS back, wholly in the private sector making money. That is all that matters.

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