june-20-01George Osborne indicated that the 39 percent of Lloyds current owned by taxpayers could be sold ‘within months.’ The Chancellor announced the impending sale during a Mansion House speech, which he makes every year. He claimed that Lloyds could be sold at a profit for the government, freeing up billions of pounds in revenue.

Lloyds shares are currently valued at above the 61.2p that the government needs in order to break even on its holdings in the company. While a sale could potentially be profitable for the government, the huge amount of shares that are publicly owned – around 39 percent of the bank – means that they will likely be sold at a discount.

The shares should likely be sold to fund managers first, allowing large quantities of the government’s shares to be sold relatively quickly. The Chancellor claimed that a portion of the government’s shares could later be sold to the general public as part of a larger offering.

Lloyds’ return to private ownership has been designed to benefit British taxpayers, according to the government. The bank is reportedly more effective in managing its operations when privately owned, supporters claim. Sir Mervyn King, the outgoing Bank of England Governor, claimed that the bank required ‘decisive action.’

Royal Bank of Scotland Group, another financial services company largely owned by the government, aims to return to private ownership by the end of 2014. RBS chief executive Stephen Hester recently stood down from his post, leaving the bank in a search for a replacement that will guide it while under private ownership.

With Lloyds returning to private ownership within months and RBS following in the next eighteen months, the UK’s financial sector could see a change in services that’s beneficial for the re-emergence of the financial services industry as a whole.

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