Lloyds is rocketing to privatisation by 2016

AntonioGettyLloyds CEO Antonio Horta-Osorio.

The UK government is selling shares in Lloyds as fast as it can, and overnight sold off a further 734 million shares in the bank.

Filings from Lloyds show the Treasury sold an estimated £600 million ($US946.7 million) worth of shares overnight. Around £150 million ($US236.69 million) of that will be profit, thanks to Lloyds’ shares recovery since the bailout.

The government was forced to pump £20.5 billion ($US32 billion) into Lloyds at the height of the financial crisis in 2008 and 2009. Shares in the struggling lender were bought at an average price of 63.1 pence ($US1) when fees are factored in. Yesterday Lloyds shares closed at 87.08 pence ($US1.37).

The Treasury still owns just under 17% of Lloyds – over 12 billion shares – but the government can’t sell them fast enough.

Osborne is scrambling to sell-off as much as possible to raise cash to meet the government’s spending deficit. The Tories have committed to running a budget surplus — spending less than they raise in taxes — by 2017/18, a target many see as unrealistic. The Conservatives have had a deficit every year since 2010.

The Chancellor plans to raise up to £23 billion ($US36.3 billion) through sell-offs to fund this target, including the student loan book and the government’s remaining Royal Mail stake.

Lloyds will likely be fully private by the end of the year while Chancellor George Osborne is also keen to sell the government’s stake in Royal Bank of Scotland. Selling the RBS stake is controversial given that, unlike Lloyds, shares in the bank have not recovered since its state bailout, meaning the taxpayer would face a loss.

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