Analysts expect the government to return Lloyds Banking Group (LON:LLOY) to private ownership before the end of next month, the Financial Times has reported. With a remaining stake of less than two percent and some £20 billion now returned to taxpayers, the Treasury is likely to imminently recoup the remaining £300 million.
Lloyds’ share price has advanced in London this morning, having gained 0.87 percent to 62.74p as of 08:22 BST, outperforming the broader UK market, with the benchmark FTSE 100 index having slipped marginally into the red and currently standing 0.20 percent lower at 7,133.01 points. The group’s shares have gained 0.4 percent so far this year and continue to trade below the taxpayer’s break-even price of 73.6p.
The FT reported yesterday that analysts expect the government to complete Lloyds’ return to private ownership before the end of May. The Treasury, which has been selling down its stake in the bailed-out lender via a pre-arranged trading plan, needs to offload a further 1.4 billion shares. While the Office for Budget Responsibility estimated in February that, based on Lloyds’ share price at the time, the government would make a £100 million profit, bankers briefed on the selldown told the newspaper that they expect the gain to be higher.
“The selloff is symbolic, rather than a transformational change,” the FT quoted Ian Gordon, an analyst at Investec, as saying. “But even for a relatively successful profitable bank like Lloyds — and in my view, it’s the only UK bank which will be generating a 10-percent return on tangible equity before 2020 — it’s taken eight years to sell down.”
The newspaper, however, also reports that some analysts argue that any fallout from the Brexit vote, such as a slowdown in economic growth, an increase in unemployment and a drop in demand from borrowers, would impact Lloyds more than any of its peers, given the group’s focus on UK lending.
In analyst news, Deutsche Bank, which has a ‘hold’ rating on Lloyds, lowered its valuation on the shares from 70p to 66p today. According to MarketBeat, the bailed-out lender currently has a consensus ‘hold’ rating and an average price target of 70.09p.