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Tim May: The ‘lost’ £230m and the real failure of the Lloyds share sale


Newspapers today reported the findings of the National Audit Office report on the Government’s sale of Lloyds shares, which has found that the taxpayer made a loss on the transaction – sort of.

This first tranche of Lloyds shares were sold to institutional investors only, remember, although ministers have now said several times that it is hoped that future tranches would offer something for individual investors too.

The NAO report found that the Government lost £230m on the share sale, even though it sold the shares above the price at which they bought them. Its paper gain was £120 million, but the NAO then subtracted from that the cost to the Government of borrowing money to buy the shares in the first place.

As individual investors, we all have to be extremely careful if we borrow money to buy shares, though in some specific instances (capital gains tax planning for instance) it can be very useful. In this case, the Government was doing so to stabilise the financial system – this was the big bank bailout of 2008. The NAO agrees, as we do, that it was the right thing to do at the time.

So the NAO appears largely satisfied with the share sale and the way it was conducted.

Our next concern should be the circumstances in which future sales of Lloyds shares are conducted. Taxpayers – who funded the bailout, after all – are calling loudly for involvement in any future share sale, as ministers have suggested. The expectation is that at some point there will be a retail share offer, in which individuals will be invited to buy a proportion of the Government’s remaining holding in Lloyds Bank.

The Wealth Management Association’s members manage more than £600bn of assets for more than four million individuals, trusts and charities.

Our position is clear: members of the public should have the opportunity to benefit directly from the financial support their government provided to the banks during the global financial crisis. It is in everybody’s interests that the Government sells its holdings in the state-supported banks quickly and efficiently. But, as the biggest shareholder, the Government is also responsible for ensuring the banks follow best practice and good governance.

We all want stronger, more accountable banks. Surely the best way to achieve this is to ensure the widest possible range of shareholders. Individual shareholders are typically investors, not speculators – they tend to be longer-term holders of shares, and many take an active interest in the performance of the companies they own.

This NAO report, then, should introduce no excuses for failing to make the right decision – failing to involve private investors in a future tranche of Lloyds shares.

Tim May is chief executive of the Wealth Management Association



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  1. Isn’t there still an Elephant I. the room? The purchase of HBOS by LTSB without any meaningful due diligence following behind closed doors discussions with then Prime Minister Gordon Brown was the reason for LTSBs failures. This deal wiped out the value of many a LTSB’s share save schemes in one blow and put back their retirement hopes and dreams.

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