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Lloyds stake sale in autumn 'distinct possibility' if UK votes to stay in EU

Published 03/06/2016

A vote to remain in the EU is expected to bolster the share price of Lloyds beyond the 73.6p point at which taxpayers can break even, according to City analysts
A vote to remain in the EU is expected to bolster the share price of Lloyds beyond the 73.6p point at which taxpayers can break even, according to City analysts

The Government's final stake in Lloyds Banking Group could be sold off as early as September if Britain votes to stay in the European Union, experts have said.

A vote to remain in the EU is expected to bring certainty to the financial markets and bolster the share price of Lloyds beyond the 73.6p point at which taxpayers can break even, according to City analysts.

It is believed that a significant rise above this price could be enough to force the Treasury into a quick retail sale of its 9.2% stake, with the earliest opportunity likely to be in September following the publication of the lender's interim results in July.

Danny Cox, of Hargreaves Lansdown, told the Press Association: "What we have seen recently is that Lloyds shares have been coming back up. We would expect to see financial stocks generally benefiting from a vote to remain in the EU.

"Lloyds is a good indicator of the health of the UK economy and we would see more certainty leading to the share price rising.

"If we get a remain vote, we see the markets rising, we know the Government is keen to no longer be shareholder in any of the banks and if the market conditions are right, then September or October is a distinct possibility."

Shares in Lloyds briefly broke through the 73.6p mark on Wednesday May 25, closing at 73.74p. The price currently sits at around 71p.

Any rise above the 73.6p mark automatically triggers a drip feed sale to institutional investors. The Treasury has already sold £7.4 billion through the book builds and more than £9 billion through the trading plan.

Chancellor George Osborne postponed the sale of the Government's final stake in the high street lender in January, blaming turbulence in the global markets.

He said he would wait until volatility in the markets had "calmed down" before pressing ahead with the sale, which had been slated for the spring but was later postponed to any time between 2016 and 2017.

Investec analyst Ian Gordon said the Treasury may look to press ahead with the retail sale of its remaining stake in the autumn, if market uncertainty subsides following a vote to remain in the EU.

He said: "If you have a set of circumstances which leads to the price comfortably in excess of 73.6p in the second half of the year, I would expect the Treasury to do exactly that. But would I expect it on June 24, no I wouldn't."

He added: "In practical terms it would seem most unlikely for them to rush something through in July ahead of its interim results."

Mr Gordon said it was more likely that the Chancellor would look to push the sale through between September or October.

The Government - which owned a 43% stake following the 2008 financial crash - has already sold off more than 80% of its original investment in Lloyds, recovering in excess of £16.8 billion for the taxpayer.

A Treasury spokesman said: "As set out at the Budget in March, the Government is determined to build on this success by making Lloyds shares available to the public this financial year.

"Any future share sale would depend on market conditions at the time."

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