LONDON, June 19 Britain is ready to start
selling its shares in Lloyds Banking Group and will
examine whether to break up Royal Bank of Scotland (RBS)
, Finance Minister George Osborne said on Wednesday.
The government is keen to show Britain's part-nationalised
banks are recovering from the 2008 financial crisis. A sale of
part of its 39 percent stake in Lloyds, at a profit, would allow
it to claim at least partial success.
Osborne said the government is considering options for
selling shares in Lloyds. He said the first sale would likely be
to institutional investors such as pension funds, but he would
consider all options for subsequent sales, including selling
shares to the public.
"Nothing better signals Britain's move from rescue to
recovery than the fact that we can start to plan for our exit
from government share ownership of our biggest banks," Osborne
said in his annual speech to financiers in the City of London.
The government pumped a combined 66 billion pounds ($103
billion) into the banks to keep them afloat during the 2008
financial crisis, leaving it with an 81 percent shareholding in
RBS and a 39 percent stake in Lloyds.
A sale of shares in Lloyds has been seen as more realistic
than an RBS sale as its shares are already trading above the
government's break-even price of 61.2 pence, having been the top
performer in the FTSE-100 last year. In contrast, the
taxpayer is still sitting on a loss of nearly 10 billion pounds
on the government's investment in RBS.
Osborne said a sale of RBS shares remained some way off. In
the meantime, he said the government would urgently investigate
the case for hiving off its soured property loans into a 'bad
bank', leaving the remaining 'good bank' better able to lend to
British households and businesses.
A decision on whether or not to split RBS will be made this
autumn after the review has been completed. Osborne said he
would not consider a "good bank/bad bank" split if it meant a
further injection of capital or a larger government stake.
Osborne previously had rejected the idea of breaking up RBS,
saying it would be too expensive.
However, the Parliamentary Commission on Banking Standards,
which he set up last year to examine the industry, said on
Wednesday that the current state of RBS was creating problems
for banking competition and for the British economy.
"If the operational or legal obstacles are insuperable, the
government should tell Parliament why," commission chairman
Andrew Tyrie said.