Despite widespread expectations that George Osborne would sell up to £5bn of shares within days, sources indicated he would instead wait until September, the Daily Mail reports.
This is a move some will see as taking a gamble that the shares will not fall in value over the traditionally choppy summer months on the stock market.
Shares in the bank rose above the average price paid by the Treasury for its stake in 2008, reaching 73¾p last week on the back of the bank’s strong first half results.
The Treasury paid an average of 73p for its shares, but says that it only needs 61p to break even given other returns it has received from the bank. On that calculation Osborne is sitting on almost £4 bn in profit on the shares.
Given that the City traditionally slows down in August as bankers take holidays, it is thought it would be difficult now to place shares until September. Some have suggested that shares could be placed as soon as tomorrow or Tuesday, but that would entail an acceleration of Treasury plans, sources said.
The Government is thought to be lining up a placement with major institutional holders of the shares.
It could sell a 10% stake overnight through what is known as an ‘accelerated bookbuilding’.
That would involve calling up the top ten institutional shareholders and asking each of them to take a small percentage.
Shares in the bank surged last week after it said that it was making more money from UK customers, by reducing the amount of interest it pays on deposits.
Lloyds is also planning to talk to regulators later this year about paying a £700m dividend to shareholders.
The expected payout – which the City anticipates will be 1p per share – will further increase any taxpayer profit on the bank.
Royal Bank of Scotland, which last week named its retail boss Ross McEwan as chief executive, is much further away from reprivatisation.
Despite reporting a half-year pre-tax profit of £1.4 bn, RBS shares closed the week down at 322½p, well short of the 407p the government argues would net it a profit on the deal.
