Near 4 year high @77.90 78.69p

Intention to Dispose of c. 6% Lloyds Banking Group

Disposal of approx 6% of Lloyds Banking Group

Further to its announcement on 16 September 2013, UKFI announces the successful completion of the disposal of part of HM Treasury's shareholding in Lloyds Banking Group plc (the "Company"). The disposal was effected by way of a Placing (the "Placing") of shares (the "Placing Shares") by way of an accelerated bookbuilding process to institutional investors.

In summary, following settlement of the Placing which will take place on 20 September 2013:

· The shareholding of HM Treasury will be reduced from 27,608,563,642 ordinary shares, representing approximately 38.7% of the ordinary share capital of the Company, to 23,326,529,533 ordinary shares, representing approximately 32.7% of the ordinary share capital.

· Accordingly, the overall size of HM Treasury's shareholding will be reduced by approximately 15.5%.

· The Placing Price was 75.00 pence per share. As a result, the proceeds from the sale of the Placing Shares will be £3,211,525,582.

· BofA Merrill Lynch, J.P. Morgan Cazenove (who have also been acting as UKFI's privatisation strategy adviser) and UBS Investment Bank acted as Joint Bookrunners in connection with the Placing.

· UKFI and HM Treasury have undertaken to the Joint Bookrunners not to sell further shares in the Company for a period of 90 calendar days following the completion of the Placing without the prior written consent of a majority (by participation) of the Joint Bookrunners.

· Lazard & Co., Limited acted as capital markets adviser. Slaughter and May acted as Seller's Legal Counsel to UKFI in respect of English law.

Numis Add 75.73 77.36 - 85.00 Reiterates

Investec Sell 75.73 77.36 65.00 65.00 Retains

Espirito Santo Execution Noble Sell 75.73 77.36 59.00 59.00 Reiterates

I can't see why any broker would see the sale of HMG stake as a negative for the stock! But, what do I know?!!! Still holding and happily in profit, with expectations of a slow & steady increase in the sp. I'm firmly in the '85p' camp.

Bring on the divi next year!

I'm quite happy to keep holding - I'm now 40% up, having at one time as good as written the investment off.

Note from Cenkos:
"Lloyds (LLOY LN, mkt cap £55bn, 77p, Sell) – UKFI has placed 6% of the government’s stake at 75p for total proceeds of £3.2bn; a 90-day lockup period has been declared, but this could be rescinded if a majority (by participation) of the three joint bookrunners decide to place more shares – i.e. no lockup, really.

Should this be a trigger to buy some more LLOY? We don’t think so – at 75p, we’ve got LLOY on 1.3x price/tangible book for 2014E, with a forecast ROE of 3% in 2014 and 4% in 2015. Compare this with, say, HSBC (HSBA LN, mkt cap £131bn, 703p, Buy) on 1.2x 2014E price/tangible book, with forecast 2014E ROE of 11%. HSBC offers much stronger profitability at a lower multiple – thus our Buy.

For LLOY, we should note that our forecast methodology probably differs from those of other analysts, because our models are derived from the statutory accounts, not the adjusted management numbers. The HBOS acquisition was a long time ago, and we think that LLOY’s accounting/reporting should move on. The main adjustments that we make to the statutory accounts are for fair value changes, insurance volatility and one-off disposal gains – items like PPI charges, restructuring charges, and bank levy stay in our earnings numbers. An example of the difference this can make is that whilst LLOY declared £2.9bn of underlying profit in 1H13, we calculated a small adjusted loss before tax of £75m for 1H13 from the statutory accounts – which fits better with the small decline in reported tangible book value per share, from 54.9p (revised to 51.9p) at end-2012 to 54.6p at end-1H13.

Our main point is that whilst LLOY have strengthened considerably since the depths of 2009 (particularly in terms of capital strength), once LLOY move away from core/non-core management accounting, it will become clearer that the market’s expectation of profitability at LLOY is much higher than what it will be able to deliver. Our fundamental ROIC valuation model indicates that at the current share price, the market implicitly expects that LLOY will generate a long-term, sustainable ROIC of circa 18% - 10% higher than its WACC – whereas we are forecasting that LLOY will generate ROICs that are circa 4% below WACC in 2014-15. Scope for disappointment, we say."

Investec downgrade (as per previous post #4490):
"From a Lloyds perspective, our view is that little has changed as a direct consequence of this transaction. Although it remains 32.7% Government-owned, it has not been subject to the same level of value-destructive “political interference” as RBS (Sell). Indeed, many aspects of Government/BoE policy – e.g. the “Funding for Lending” scheme which caused the collapse of retail savers’ interest rates, and overt support for the housing market through the “Help to Buy” scheme - have been distinctly positive for Lloyds.

Although Lloyds’ reported profitability currently remains anaemic – EPS was 0.0p in Q2 2013, and we forecast only 0.5p in H2 2013e vs Bloomberg consensus of 2.0p, the market has become increasingly willing to “look through” such near-term weakness. We believe that, with a reducing drag from net negative exceptional items, Lloyds will be able to achieve RoE greater than CoE by 2016e – broadly consistent with the time-line we now anticipate for Barclays (Add) and ahead that which we see as applicable to RBS (Sell).

Importantly, we see the tail-risks which attach to Lloyds as significantly diminished. We believe that incremental misselling charges will be well below the £8.2bn cumulative redress provisions of the past 30 months. Moreover, the accelerated expansion of NIM to c.2.1% in 2013e – primarily driven by reduced deposit rates - significantly underscores improving “underlying” profitability.

We retain a Sell recommendation and a RoE-g/CoE-g derived 65p target price."

Is there any reason why LLOY cannot give shares in TSB to its own shareholders when it floats TSB next year?

Is there any reason why LLOY cannot use the forthcoming TSB float proceeds to buy some of the shares owned by HMG and then cancel them thus improving shareholders dividend prospects? LLOY has over 70billion shares in issue, large dividends are unlikely.

Don't be greedy! The sp has trebled over the last 18 months. What more do you want? Free TSB shares?!!! ;o)

Harry why not give long term shareholders something rather the proceeds of a TSB sale going into government coffers to be squandered on overseas aid to a country like Syria.

I'm with you, but not getting my hopes up. Trying pinging an e-mail to A H-O and suggesting it. Not sure what your %age shareholding in LLOY is, but if large enough he may listen!

HARRY perhaps a journo could raise this question, shareholders don't seem to carry much weight with the directors especially PI'S.

StockMarketWire.com
Lloyds TSB Bank plc has changed its name to Lloyds Bank plc with effect from today (23 September).

This follows the launch of TSB Bank (Project Verde) on 9 September, ahead of its divestment as required by a ruling by the European Commission in 2009.

Investec Hold 74.77 73.91 65.00 76.00 Upgrades

I prefer the Numis 85p.
Amazing how they can differ by over 25%!

JP Morgan raises TP from 77p to 84p neutral.

Investec Buy 73.81 72.52 76.00 80.00 Upgrades