Treasury eyes resale of its bailout stake in banks

The Treasury is looking at offering some of its lucrative preference shares
in the banks to pension funds and other City investors to reduce the exposure of
taxpayers’ money in the bailout and enable City fund managers to buy in the
expectation that they will purchase more ordinary shares in the three troubled
banks.

Treasury
officials are considering whether to allow financial institutions access to the
£9bn of high-yielding preference shares the Government is buying as part of its
£37bn bailout of Royal Bank of Scotland, HBOS and Lloyds TSB, The Times
reports.

Under the original plan, the Government was to purchase all the preference
shares, leaving ordinary shareholders with stock which paid little or no
dividend. Ministers initially indicated the banks would not be allowed to pay
any dividend while the preference shares were outstanding, but this has now been
recognised as too draconian.

A decision could be made by chancellor Alistair Darling before Christmas. A
Treasury spokesman said the main criteria determining the shape of the
recapitalisation plan would be to preserve British financial and economic
stability and to ensure that taxpayers receive good value.

Further reading:

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