UK government considers options to sell Lloyds stake

George Osborne says the government will also investigate the case for taking bad assets out of the Royal Bank of Scotland.

New Statesman
George Osborne. Credit: Getty Images.

The British chancellor of exchequer George Osborne, in his Mansion House speech yesterday, told that the government is actively considering options to sell its 39 per cent stake in Lloyds Banking Group and investigate the case for selling bad assets of the Royal Bank of Scotland (RBS).

Osborne, however, didn’t reveal a fixed timetable or price to sell the banks to the private sector.

On sale of Lloyds’ shares, Osborne said that the first sale is likely to be an institutional one, but for subsequent sales, the government will look at all options including retail offering to the general public.

Osborne said that the government will sell RBS only following its full recovery. He, however, added that the government will urgently investigate the case for taking the bad assets…out of RBS.

Osborne said: “We will establish a bad bank if it meets our three objectives: if it would accelerate the path back to private ownership, deliver benefits for the wider economy and be in the interests of taxpayers. But if the review reveals that it would not achieve these things, then we won’t do it.”

The Treasury will conduct a review weighing the pros and cons by autumn.

The chancellor urged the Office of Fair Trading (OFT) to review the impact that new challenger banks created by Lloyds and RBS will have on “strengthening competition in small business banking”, and to identify what more can be done.

Osborne started his speech saying that the economic news has been better in recent months and that while Britain has left intensive care, there is still a need to secure the recovery.

“Nothing better signals Britain’s move from rescue to recovery than the fact that we can start to plan for our exit from government share ownership of our biggest banks”, he said.