Chancellor to sell remaining stake in Lloyds Banking Group
The Chancellor will offload the Government's remaining stake in Lloyd's Banking Group to institutional investors, ditching George Osborne's plans of a retail sale to the public.
Philip Hammond said the £3.6 billion - or 9.1% - stake would be sold through a trading plan after experts warned a retail sale was no longer an option due to "ongoing market volatility".
Previous trading plans had seen the Government automatically sell shares in Lloyds once its price rose above 73.6p - the price it paid to bail-out the bank in 2009.
Mr Hammond said the move would allow the Government to recoup the entire £20.3 billion used to bail out the bank during the financial crisis.
The plan marks another departure by the Chancellor from his predecessor after scrapping Mr Osborne's pledge to put the public finances back into surplus by 2020.
Speaking from Washington, Mr Hammond said he had "listened to the experts" who advised him against a retail sale.
"Returning Lloyds to the private sector is in the interests of the bank, taxpayers and the country as a whole.
"That is why exiting our stake in Lloyds in an orderly way, and at the best possible price, is one of my top priorities as Chancellor."
"Our plan will get back all the cash taxpayers invested in Lloyds during the financial crisis and leave the bank in a better place to continue the crucial role it plays in supporting individuals, families and businesses up and down the UK," he added.
The Government snapped up a 43% stake in Lloyds following the 2008 global financial crisis.
Around £16.9 billion has already been raised by the Government from selling its stake in Lloyds. It still owns 73% of the Royal Bank of Scotland.
Mr Osborne had temporarily shelved plans to sell off Government stakes in British banks in January and after the EU referendum result on June 23.
Morgan Stanley International will now act as a broker on behalf of the Treasury to carry out the new trading plan, which will allow the Government to drip-feed the sale of its stake to institutional investors.
UK Financial Investments - the organisation which manages the Government's investments in Royal Bank of Scotland, Lloyds, and UK Asset Resolution - said the sale would begin immediately and last until October 6, 2017.
Shares in Lloyds, which have plunged 23% since the day of the EU referendum, were down more than 4% after the announcement.
Tom McPhail, Hargreaves Lansdown's head of retirement policy, said Lloyds sale did not dovetail with the Government's pledge to support ordinary people.
"This would have been an opportunity to not only raise money for the Treasury but also to democratise retail investing.
"Share offers of this nature are an excellent mechanism for developing consumer interest in long term investments, so this decision to place shares via an institution hardly seems in keeping with the new Government's mantra of standing up for ordinary people."
Lloyds announced in July that it is cutting 3,000 jobs and shutting 200 branches in the wake of lower interest rates and as part of an extension of a cost-cutting programme.
Results for the first half of the year saw statutory profits more than double to £2.5 billion, but the lender warned that Brexit could have an adverse impact on its future performance.