Lloyds Share Price: UK Lender Commits to Second Stage of Help to Buy
iNVEZZ.com Wednesday July 24th: Lloyds Banking Group (LON:LLOY) yesterday became the first of the major UK banks to commit to the second phase of the government’s Help to Buy mortgage scheme. Shares in the bank gained more than one percent in the early morning today and at 09.37 BST were trading at 68.70p.
Chancellor George Osborne met yesterday with housebuilders and top mortgage lenders to discuss how the second part of the Help to Buy programme will work ahead of its January launch. One of the features planned for the scheme is to allow borrowers to receive a mortgage with only a five percent deposit. Meanwhile the government will guarantee a proportion of the loan as an insurance policy for the banks for all properties valued at less than ₤600,000.
“From all the information we’ve got at the moment, we are definitely in the camp where we will join the scheme,” said Stephen Noakes, director of mortgages at Lloyds Banking Group. “We’ll continue to work closely with the Treasury as they finalise the details, but fully expect to be ready to launch in January.”
**Lloyds Considers Selling Australian Units**
Lloyds was weighing a possible sale of its Australian asset finance and commercial lending units, according to inside sources quoted by the Wall Street Journal.
The two divisions comprise the bulk of the bank’s Australian operations and have assets under management of about 9.4 billion Australian dollars (₤5.66 billion). In case of a sale Lloyds would be left only with its financial markets unit, which provides services including foreign exchange hedging and interest rate swaps.
Lloyds has been shedding assets in preparation for a sale of the government’s 39 percent stake. UK Financial Investments, the body charged with managing the taxpayers’ stake in both Lloyds and Royal Bank of Scotland, on Friday last week appointed JP Morgan as a privatisation strategy adviser.
British regulators have allowed the two government-backed banks to fill their multibillion-pound capital deficits by using future earnings and by disposing of assets, instead of forcing them to issue equity or to accept taxpayers’ money. The UK Prudential Regulation Authority said in June that Lloyds needed about ₤8.6 billion to reach the capital ratio required of Europe’s banks. Later in the same month Lloyds told the regulator that it had reduced that gap by ₤1.9 billion thanks to asset sales and other measures.
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**First Tranche of Shares Sale Could Be Worth Up to ₤5 Billion**
Bloomberg reported last week that the UK government was considering selling as much as ₤5 billion of Lloyds’ shares as the first step to full disposal of its interest in the bank.
The government is mulling over whether to sell five percent to 10 percent of Lloyds to institutional investors as soon as September. The transaction is meant to measure investors’ appetite for a further offering of equity.
Lloyds is expected to report profits in excess of ₤2 billion next week when it posts its half year results. The bank might have to set aside more funds to cover claims for the mis-selling of payment protection insurances (PPIs), on top of the ₤6.7 billion it has already earmarked.
**Lloyds’ share price was 68.53p as of 24.07.2013, 09.41 BST.**