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Share sale returns Lloyds to private sector | |
(about 11 hours later) | |
The government has confirmed its remaining shares in Lloyds Banking Group have been sold, eight years after pumping in £20bn to save it. | |
Lloyds Bank said the government will see a return of £21.2bn on its investment. | |
At the height of the financial crisis taxpayers owned 43% of Lloyds. | At the height of the financial crisis taxpayers owned 43% of Lloyds. |
Its return to the private sector is in stark contrast with the other bailed-out bank - Royal Bank of Scotland - that is still 73% owned by taxpayers. | Its return to the private sector is in stark contrast with the other bailed-out bank - Royal Bank of Scotland - that is still 73% owned by taxpayers. |
The government has been slowly selling down its stake in Lloyds for the past five years. | The government has been slowly selling down its stake in Lloyds for the past five years. |
Ministers have claimed that all the public money used to buy Lloyds shares has been returned. | Ministers have claimed that all the public money used to buy Lloyds shares has been returned. |
'Very difficult situation' | |
However, the true cost is disputed, with some critics claiming the lost interest has not been taken into account. | However, the true cost is disputed, with some critics claiming the lost interest has not been taken into account. |
Others have argued that the heavy losses previously suffered by Lloyds also hit the government's stake. | Others have argued that the heavy losses previously suffered by Lloyds also hit the government's stake. |
Either way, the £20.3bn of public funds used to buy the shares had already been recouped due to dividend payments made to all shareholders. | Either way, the £20.3bn of public funds used to buy the shares had already been recouped due to dividend payments made to all shareholders. |
At last week's annual meeting, Lloyds chief executive António Horta Osório told shareholders he expected the government to make at least £500m from the bailout. | At last week's annual meeting, Lloyds chief executive António Horta Osório told shareholders he expected the government to make at least £500m from the bailout. |
But on Wednesday morning he said the true figure was closer to £900m and called Lloyds one of the "strongest banks" in the world. | |
He also said the government had received more money than was originally invested. | |
"The fact that the government decided to use taxpayers' money, which is a last resort, to put £20.3bn in Lloyds at the time is evidence that the bank was in a very difficult situation," he told BBC Radio 4's Today programme. | |
"When I arrived six years ago the bank was in a very difficult financial situation and not focused on its customers in the UK." | |
Job losses | |
The shares have been sold off by Morgan Stanley at below the 73.5p average price paid in the three-stage bailout. | The shares have been sold off by Morgan Stanley at below the 73.5p average price paid in the three-stage bailout. |
But taking the dividend payments into account means the total £20bn outlay has already been repaid. | But taking the dividend payments into account means the total £20bn outlay has already been repaid. |
Former chancellor George Osborne had hoped to offer the shares at a discount direct to the public, with a campaign similar to the classic Tell Sid campaign for British Gas in the 1980s. | Former chancellor George Osborne had hoped to offer the shares at a discount direct to the public, with a campaign similar to the classic Tell Sid campaign for British Gas in the 1980s. |
Reaction from the City was broadly positive. | |
"Lloyds is now back to business as usual, and the withdrawal of a large seller from the market should be positive for the share price," said Laith Khalaf, senior analyst at Hargreaves Lansdown. | |
"The Treasury won't be making a song and dance about the Lloyds sale, seeing as we are in a period of purdah running up to the general election. | |
"Indeed the champagne corks should probably be kept on ice seeing as the taxpayer has only broken even on the face value of the Lloyds bailout, and is still nursing a loss if you factor in the borrowing costs associated with stumping up the money back in 2009." | |
The turnaround has not been without pain. About 57,000 jobs have been cut at Lloyds as it returned to profitability. | The turnaround has not been without pain. About 57,000 jobs have been cut at Lloyds as it returned to profitability. |
The EU also forced the bank to sell 600 branches due to competition rules and £17bn was set aside to fund PPI misselling - the biggest bill for any of the banks caught up in the scandal. | The EU also forced the bank to sell 600 branches due to competition rules and £17bn was set aside to fund PPI misselling - the biggest bill for any of the banks caught up in the scandal. |
"We were the first bank of the big banks to drop legal actions that were dragging paying PPI and I was the first bank to drop that legal action and start addressing s the issue seriously. It was a bad product this had to be done [fixed] on principle and not in terms on financial provisions." Mr Horta Osório added. | |
But this year a £4.3bn profit - the biggest in a decade - finally allowed the bank to put its past behind it. | But this year a £4.3bn profit - the biggest in a decade - finally allowed the bank to put its past behind it. |
While the sale of the Lloyds stake marks a major turning point for the bank, taxpayers' other bailed-out institution - RBS - remains firmly in government hands. | While the sale of the Lloyds stake marks a major turning point for the bank, taxpayers' other bailed-out institution - RBS - remains firmly in government hands. |
RBS was rescued with a £45bn bailout in 2008 and 2009 and has failed to turn a profit since. | RBS was rescued with a £45bn bailout in 2008 and 2009 and has failed to turn a profit since. |
The bank recently posted a ninth consecutive year in the red, with losses of £7bn, bringing total losses since the bailout to £58bn. | The bank recently posted a ninth consecutive year in the red, with losses of £7bn, bringing total losses since the bailout to £58bn. |
The lender still faces £5.9bn of charges related to historic misconduct issues and potential legal costs. | The lender still faces £5.9bn of charges related to historic misconduct issues and potential legal costs. |
A £400m pot has also been set aside to compensate small business owners and customers of its controversial Global Restructuring Group. | A £400m pot has also been set aside to compensate small business owners and customers of its controversial Global Restructuring Group. |
The now-defunct division secretly tried to profit from struggling businesses, leaked documents showed last year. | The now-defunct division secretly tried to profit from struggling businesses, leaked documents showed last year. |