The sale of Lloyds Bank shares is the latest phase of the government’s plan to exit from its shareholding in the group in the coming months.
Chancellor George Osborne said at a Conservative party conference in Manchester: “We’ve got a big task here, which is to finally get the British government out of owning great chunks of our banking system.
“We’ve made a lot of progress with Lloyds, but this final chunk, this final sale, I don’t want all of those shares to go to City institutions. I want them to go to members of the public.”
Brits will be offered a five per cent discount to Lloyds’ market price, and in a bid to avoid wealthier investors snapping up the shares, anyone applying for less than 1,000 will be prioritised.
Richard Hunter, head of equities at Hargreaves Lansdown, said the £2bn sale equalled a 3.6 per cent stake in the bank.
“Nonetheless, it does provide a welcome opportunity for smaller investors to at least participate in a fraction of the sell-off, in what is currently a well-regarded bank,” he said.
“With a projected dividend yield which could nudge four per cent and interest rates remaining in the doldrums, you can see this being of interest to income-seeking investors in the current environment.”
Furthermore, those who keep their shares for at least 12 months will get one bonus share for every ten they own.
The move echoes government privatisations in the 1980s, when the Conservative government sold shares worth 3.9bn in British Telecom and a 5.6bn stake in British Gas.
Osborne described the sale as the biggest privatisation in the UK for more than 20 years.