Surprise as U.K. reveals shares sale at state-backed bank

LONDON — A fresh batch of shares at Britain's partially state-owned Lloyds Banking Group will be sold into the market over the coming months.

Britain's Treasury said UK Financial Investments — which is supposed to manage the taxpayer's stake in banks at arms length from the government — had created a "trading plan" for a gradual sell-off over six-and-a-half months.

There have been two previous sales but these both involved large chunks of shares disposed of at once to big investors. The sales reduced the state's stake to just under 25% from 40%.

The announcement of a third sell-off took the City — one of London's main business districts — by surprise, coming just a day after Lloyds scraped through Bank of England stress tests.

Some analysts said the test result would dash hopes of an early resumption of dividend payments. Stockbroker Jeffries believes payments will not resume until 2016.

Lloyds must secure approval from the Bank of England first. Announcing the plan, the U.K's Chancellor George Osborne said: "It is another step in reducing our national debt and in getting taxpayers' money back."

The earlier sales raised $12 billion (£7 billion) for the state's threadbare coffers and the trading plan could see the taxpayer's stake in Lloyds reduced to 20%. Shares will not be sold below $1 (73.6p), the average price paid by the taxpayer in the bailout during the 2008 financial crisis.

This is an edited version of a story that originally appeared in The Independent. The content was created separately from USA TODAY.

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