Roll up, roll up, for your shares in Lloyds Banking Group. Or rather, don't. This latest sale of a 7.5% stake, reducing the state's holding to 25%, is a strictly institutions-only affair. But the disposal is intended to clear the decks ahead of the government's long-promised offer to retail investors, which could happen in the autumn.
That's the one where the Treasury will have to swallow hard. Visions of a Royal Mail-style stampede of buyers seem fanciful. First, at Lloyds' current market value, 25% equals £14.5bn, which is a lot of stock to shift. Second, unlike the privatisation of the postal service, a giveaway at a huge discount is impossible because the market price is the public yardstick of value for money for taxpayers.
Third, Lloyds hasn't yet announced a dividend – and won't even apply to regulators to pay one until the autumn. Even when dividends do return, it will take time to reach the intended level of distribution of 50% of earnings. So Lloyds, at the moment of an autumn offer to retail investors, won't be a dividend geyser. That makes it a trickier pitch.
Indeed, it seems quite likely that the government will still be relying on institutional demand to underpin the final sale of Lloyds shares. The alternative course would be to wait until dividends are flowing properly. That, though, wouldn't fit the election timetable.
