Government Sells 6% Of Lloyds Banking Group PLC At 75p

The shares of Lloyds Banking (LSE: LLOY) (NYSE: LYG.US) slipped 1.5p to 75.8p during early trade this morning after the government confirmed it had sold 6% of the bank to institutional investors at 75p a share.

The Treasury announced after the market had closed yesterday afternoon that it would sell nearly 4.4bn shares of Lloyds through an ‘accelerated bookbuilding process’.

The shares had closed yesterday at 77.3p, indicating the buyers bought at a 3% discount.

The disposal raises £3.2bn for the government and the taxpayer’s stake in the bank now reduces to 32.7%.

During the banking crash, the government injected around £20bn into Lloyds to acquire 27.6bn shares at an average price of 73.6p.

Thus the 1.4p profit on each share sold yesterday books the taxpayer a £600m gain.

The shares of Lloyds have surged 93% since this time last year after the bank pleased investors with encouraging results.

In particular, half-year figures released in August showed underlying profits advancing from £1.9bn to £2.9bn alongside better-than-expected guidance on full-year margins and costs.

The Treasury’s 75p per share disposal price equates to 1.37 times the bank’s latest net tangible asset value and possibly 10 times estimated profits for 2014.

Of course, whether that valuation, the government's sell-off and the general outlook for banks all combine to make Lloyds a 'buy' or a 'sell' right now is something only you can decide.

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> Maynard does not own any share mentioned in this article.