U.K. Government Seeking Adviser for RBS, Lloyds Stake Sales
The U.K. government will review the sale of stakes in the two bailed out banks
LONDON—The U.K. government is seeking an adviser to lead the next stage of its effort to sell stakes in Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC, people familiar with the matter said Wednesday.
The government still owns an 80% stake in RBS and a 20% stake in Lloyds following bailouts by taxpayers in 2008. U.K. Financial Investments Ltd, which manages the government’s bank stakes, appointed J.P. Morgan Chase & Co. as privatization strategy adviser in July 2013 but is now retendering for the role.
Whoever wins the job will likely help oversee one of the biggest-ever privatizations, as the government starts preparing to sell RBS shares currently worth £32.4 billion.
This month the Conservative Party won a surprise majority during the general election, paving the way for an accelerated sell down of the U.K. government’s stakes in the two bailed out banks. Earlier in the year Chancellor of the Exchequer George Osborne said that, if re-elected, the Conservatives would look to privatize RBS “as soon as possible” and would review a potential sale at the beginning of the next Parliament.
“When it comes to RBS, we have made huge progress in de-risking and restructuring the bank, bringing us close to the point at which we can start getting taxpayers’ money back,” Mr. Osborne said in a speech in January. “Early in the next Parliament we will have to make a decision on the timing of any exit program from RBS.” A decision over the review could be made in the next two or three months, according to people familiar with the matter.
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The Conservative Party also pledged to sell £4 billion of Lloyds shares via a retail offering.
A panel of 18 banks and advisory firms, including J.P. Morgan, are eligible for the job, according to UKFI documents. At the time of J.P. Morgan’s appointment two years ago, UKFI said it would be reviewed periodically and that it expected different firms to hold the role in the future.
If the Treasury does push ahead with a privatization of RBS it would likely do so at a loss. The U.K. government pumped £45.5 billion into RBS at an average price of around £5 a share. Currently RBS’s shares trade at £3.53. The bank, which is in the process of shedding assets across the world, is still undergoing heavy restructuring and is set to be hit by a series of fines for a range of misconduct issues. Any review would have to justify taxpayers taking a loss on the RBS bailout.
At Lloyds the situation is more straight forward, as the bank’s shares are trading above the price paid by the government in the bailout. UKFI has mandated an investment bank to drip feed its Lloyds shares back into the market. So far the U.K. government has sold £2.5 billion of Lloyds shares via this trading plan. Overall it has recouped more than £10 billion of its initial £20.3 billion bailout of the bank.
The U.K. Treasury declined to comment.