When Will the Government Sell Shares in Lloyds Banking Group PLC (ADR) (LYG) and Royal Bank of Scotland Group plc (ADR) (RBS)?

Lloyds Banking Group PLC (ADR) (NYSE:LYG): moving the goalposts
If the government and management are playing political football at RBS, they’ve moved the goalposts at 40% state-owned Lloyds Banking Group PLC (ADR) (NYSE:LYG).

CEO Antonio Horta-Osorio’s bonus will pay out if the government sells a third of its shares at more than 61 pence. That’s well below the 74 pence the government paid. But arcane accounting means that 61 pence, the level Lloyds Banking Group PLC (ADR) (NYSE:LYG) was trading at when it was bailed-out, is the price at which the holding is carried in the Treasury’s books.

With Lloyds’ shares having touched 55 pence this year, 61 pence isn’t so challenging a goal. While all the attention is on RBS, Mr Horta-Osorio could be lining up a couple of institutions, and might just put one in the back of the net first.

Growth
The acceleration in privatization plans is yet another positive driver for the banks’ share price. As they finally put past excesses and errors behind them, there’s a reasonable growth story behind both state-owned lenders.

But investment in these banks comes with a health warning over and above most shares. They would be first and worst to suffer the shockwaves from across the Channel if the eurozone crisis blew up.

For a growth story with a lower risk profile, I suggest you look at this company. Its industry has gone through far bigger changes than the banks, yet the company hasn’t made a capital call on its shareholders for more than 70 years. It has increased or held its dividend every year since at least 1988.

Its earnings per share have gone up by 44% since 2009, and there could be considerable value that isn’t reflected in the share price. That’s why it’s been chosen as “The Motley Fool’s Top Growth Stock for 2013.”

The article When Will the Government Sell Shares in Lloyds and Royal Bank (NYSE:RBS) (LSE:RBS) of Scotland? originally appeared on Fool.com and is written by Tony Reading.

Tony does not own any shares mentioned in this article.

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