A new report from the National Audit Office (NAO) has concluded that UK taxpayers lost out on as much as £230 million as a result of the recent share sale involving Lloyds Banking Group.
However, the NAO concluded that even though well over £200 million more could have been added to the public purse, the deal still represented good value for money for the taxpayer.
Part of the semi-nationalised Lloyds Banking Group was returned to the private sector earlier in the year as the government sought to recoup some of the money that was spent on saving the stricken bank in the middle of the credit crunch.
NAO head Amyas Morse said that the timing of UK Financial Investments (UKFI), which managed the sale of Lloyds stocks for the Treasury, was right.
"The sale took place when the shares were trading close to a 12-month high and at the upper end of estimates for the fair value of the business," he said.
In September this year, the sale of a six per cent stake in Lloyds Banking Group to institutional investors raised £3.2 billion for the Treasury, which retains almost a third (32.7 per cent) of the company, which it is hoping to sell in the coming months.
The NAO also noted that the share sale process ran quickly as a result of the decision to restrict it to institutional investors only. The government had paid 73.6p per share in Lloyds when the bank was bailed out, with the stocks then sold on for 75p.
Stocks in Lloyds Banking Group has risen slightly since the share sale went through and the share price of the company is slightly higher in the early stages of trading this morning (December 18th). At 09:00 GMT, its stocks were 0.12 per cent up for the day and shares were trading for 76.12.
Lloyds Banking Group was not the only bank to be bailed out by the government in the recession, as the state also took a stake in Royal Bank of Scotland to prevent it from folding.
Find up to date information on the FTSE 100 and spread betting strategies at City Index
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.