Friday, May 17, 2013

Reuters: Global Markets: Shares in UK's Lloyds hit government break-even price

Posted by Isabella on 5:05 AM

Reuters: Global Markets
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Shares in UK's Lloyds hit government break-even price
May 17th 2013, 10:44

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A sign from a branch of a Lloyds bank is reflected in a window in central London May 13, 2013. REUTERS/Stefan Wermuth

A sign from a branch of a Lloyds bank is reflected in a window in central London May 13, 2013.

Credit: Reuters/Stefan Wermuth

By Matt Scuffham

LONDON | Fri May 17, 2013 6:44am EDT

LONDON (Reuters) - Shares in state-backed Lloyds Banking Group (LLOY.L) on Friday rose above the level which the government regards as its break-even price following its 20.5 billion pound ($31.4 billion) rescue of the bank, raising hopes a sale could be imminent.

Lloyds shares rose 1.2 percent to reach 62.13 pence at 1015 GMT, their highest for over two years and passing the 61.2 pence break-even price.

Although the government has not yet set a timetable for a sale, industry and political sources have said it wants to start selling when the shares are trading consistently above 61.2 pence a share. Britain's finance ministry declined to comment on Friday.

Prime Minister David Cameron is keen to show that Britain's part-nationalized banks are recovering from the financial crisis and a sale of the 39 percent stake in Lloyds, at a profit, would allow him to claim at least partial success.

Shares in Lloyds have risen by 124 percent over the past year, outperforming a 25 percent increase in the FTSE 100 FTSE.L, making it the best performing stock in the blue chip index. The bank is now valued at $66 million, making it the 6th biggest bank in Europe.

Lloyds Chief Executive Antonio Horta-Osorio told investors at the bank's annual meeting on Thursday that the bank expects to return to profit this year for the first time since 2010.

Any sale would be handled by UK Financial Investments (UKFI), which manages the government's shares in Lloyds and Royal Bank of Scotland (RBS.L).

Britain pumped a combined 66 billion pounds into RBS and Lloyds to keep them afloat during the financial crisis. Since then, both banks have undertaken massive restructurings under new management and, bowing to pressure from lawmakers, focused on lending to UK households and businesses.

Selling Lloyds shares would be more straightforward for the government than offloading its stake in RBS, which would require selling at a loss or giving the shares away to taxpayers. Cameron said this week he is 'open to ideas' over the disposal of the RBS shares. Britain is sitting on a loss of 9.2 billion pounds from its investment in the bank.

($1 = 0.6533 British pounds)

(Additional reporting by William James and Steve Slater; Editing by Elaine Hardcastle)

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