UK Government and the nationalised banks may be joined at the hip for years

U.K. Financial Investments Ltd (UKFI) , the company established to manage the government’s stakes in the Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, announced in their annual report that it appears increasingly likely that their holdings in the banks will be realised through a series of several transactions that would take place “over a period of years”.

Also in the report UKFI disclosed their shares in the bank are currently worth 10.9 billion pounds less than what they paid for them according to current market value.
UKFI are taking the long term view and hope to move shares in placements, either to institutional investors, money managers and individual investors, or through the use of convertible bonds.

Acting UKFI Chairman Glen Moreno admitted in the report that “selling the shares for the moment would be a challenging prospect,”. “The amounts involved are very large, and a successful disposal of our holdings will require professionalism and patience,” he continued.

Total UKFI investment, funded by the UK taxpayer, in the two banks is around 60 billion pounds, representing 43 percent of Lloyds and 70 percent of RBS after they intervened to save the banks from collapse late last year. The U.K. has also agreed to insure 585 billion pounds of toxic and other assets held by the two banks.

Deutsche Telekom AG hold the second largest share block, valued at eight billion pounds when purchased in 2000 and obviously worse considerably less today.
In order to dispose of these shares UKFI it will need to win investor confidence, the organization’s report said., whilst stressing that it was “unlikely to be to the taxpayer’s advantage” to reveal its sales strategy.

Every U.K. household was forces to invest £3,000 pounds in UKFI when it was formed and currently their shares are worth less than £2,500.

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Tags: Deutsche Telekom AG, Glen Moreno, Lloyds Banking Group Plc, Royal Bank of Scotland, UKFI