Market Investments Strategy
Lloyds Banking Group and RBS disposals
Disposing of the Government’s shares in Lloyds Banking Group and RBS will constitute the largest ever privatisation programme in the UK, and is likely to rank globally amongst the biggest equity market transactions during the course of the implementation period. We set out the details of our approach to this challenge in the document UKFI Strategy: Market Investments and Annual Report and Accounts 2008/09, published in July 2009, and available on our website.
Given the substantial size of the Government’s combined holdings we have deliberately not set a predefined timetable for the disposal of these investments. We are exploring all options for a sale of the shares. Consistent with UKFI’s Investment Mandate, the decision to proceed with any transaction rests with HM Treasury. We will make our recommendations to Ministers on the basis of our core objective of maximising the realisation of value for the taxpayer as shareholder, paying due regard to financial stability and competition issues (although the latter is only likely to be a relevant consideration if another incumbent bank was seeking to acquire a controlling stake in one of the businesses). Further information can be found on page 14 of the UK Financial investments Annual Report and Accounts 2010/11.
Disposal - at the heart of the Market Investments mission
UKFI’s Market Investments remit is to dispose of the Government’s shareholdings in RBS and Lloyds in an orderly and active way, with due regard to financial stability and the promotion of competition. While there are many possible approaches open to us, including strategic sales, our central assumption in thinking about our disposal programme is that we are likely to be selling shares to investors in the public equity markets.
This in turn means that we will need to do everything that we can to maximise the value of the two banks as publicly-traded entities, and to design and implement our exit strategy in the context of broader developments in the economy, financial sector and equity markets.
We see ourselves as having five principal tasks:
- understanding how the problems in the sector came about, learning the lessons and identifying the specific issues that our investee banks face;
- working with the boards and management at each bank to develop and implement an agenda to maximise value for shareholders;
- engaging with other investors and market participants to understand their views, and to seek to build confidence in our approach;
- developing and implementing a disposal strategy for the investments; and
- supporting Government (primarily HM Treasury) on their response to the crisis, from a shareholder perspective.
Statement re: Lloyds Annual General Meeting
UKFI has lodged votes in favour of all resolutions at the bank’s Annual General Meeting on 16 May. download [15,3 KB]
Statement re: RBS Annual General Meeting
UKFI has lodged votes in favour of all resolutions at the bank’s Annual General Meeting on 14 May download [15,3 KB]