During the last election, the Conservative party promised a discounted retail offering on shares for the state owned Lloyds Bank. However with the bank being amongst the worst offenders during the PPI scandal, uncertainty over it's final compensation bill has been the main reason that the shares haven't been put up for sale so far. The FCA announced that it was consulting to put a deadline in place for PPI claims, which has meant that the bank can now begin to estimate the total size of its compensation payouts.
Chancellor Osborne has since announced that ordinary investors can enjoy a 'very generous' 5pc discount on shares, in the sale of £2 billion worth of stock that will mark the final stage of Lloyds Bank finally being handed back over to the public sector; since the £20.5 billion bailout in 2008.
Despite the discount, it's not yet clear as to whether traders or the will be getting a good deal or not. The terms currently on offer state that not only will investors receive a 5pc discount, but those who hold them for a year will get a bonus share for every 10 held - up to a maximum value of £200, which is designed to try and somewhat stabilise the share price over the subsequent 12 months. But any wily investors will be scrutinising whether the bank can live up to it's promise to resume dividend payments – which has been a key part of its sales pitch to prospective shareholders.
The discounts on offer may also mean that the sale of this government asset makes a loss for the taxpayer and government. The share price at the time of the bailout was 73.6p, and currently the government has been slowly selling shares as and when the price rises above the bailout price, which has resulted in the government making a profit whilst also reducing its shareholding to below 12pc. The shares are currently priced at 77.2p, so if they fail to rise over the coming months, the discount on offer means that they will be sold at 66.7p – which is a fair way off the bailout price.
It's reported that the chancellor is keen to announce a profit overall to the public – even if the final 12% of shares are sold at a slight loss, so it remains to be seen if the 'loss for taxpayers' is as dramatic (or even apparent at all) as the newspaper headlines would have you believe.