Chancellor George Osborne has said he will raise a further £22 billion through the sale of more shares in Lloyds Banking Group and mortgage books held by the nationalised former building societies Northern Rock and Bradford & Bingley.
The taxpayer stake in Lloyds has already been cut from 40% to just below 23%. Osborne said he expected to raise a further £9 billion from the shares owned by the Treasury.
At today’s share price of 79.3p that would mean reducing the stake to about 7%.
This includes the 5% which investment bank Morgan Stanley is dribbling out into the market on behalf of UK Financial Investments, of which it has 3% to go.
Such a drip sale is unlikely for as much as another 12% of Lloyds because of the scale of the sale. Instead a retail offer is seen as a popular option for Osborne.
Osborne also expects to raise £9 billion from sales of mortgage portfolios from the former building societies now run by the so-called bad bank, UK Asset Resolution.
These have become more valuable as the economy has recovered, and last October UKAR sold a portfolio of home mortgages to a consortium controlled by JP Morgan for £2.7 billion, a modest £33 million over book value.
Osborne made no mention of selling any of the Treasury’s outstanding 80% stake in Royal Bank of Scotland. The taxpayer bailed out RBS to the tune of £45 billion in 2008 and 2009.
The levy on banks will be raised from the 0.156% it was set at for 2014 to 0.21%, which Osborne said would raise an extra £900 million.
He also said the banks would no longer be able to offset PPI mis-selling compensation and costs against their tax.
