Is the UK government in discussions about selling its banking share stakes?
In a startling news story it has emerged that the UK government, via its UK Financial Investments subsidiary, has been in contact with a number of large institutions around the world to gauge their potential interest in acquiring government-held stakes in part nationalised banks. This has shocked many analysts as there was an indication that the government was willing to hold on to these shares for a number of years and slowly release them back into the market.
The move is all the more surprising when you consider that the UK Treasury has already agreed to underwrite the £4 billion fund raising by Lloyds bank which could see that government's stake increase to over 60% from the current 43%. This is giving very mixed signals to the UK stock market, UK investors and UK analysts and is not helping the situation in short to medium term. No investment company or corporate investor is going to invest heavily in to a company which could potentially see a significant chunk of shares change hands in the short to medium term.
Quite why the government has decided to even discuss the potential change of ownership in substantial share stakes, rumoured to be over the next 12 months, is a mystery to many and goes completely against recent comments from leading authorities in the UK government.
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