Lender re­turns to pri­vate sec­tor 9 years af­ter tax­payer bailout in 2008

New Straits Times - - Business -

BRI­TAIN has sold its last re­main­ing stake in Lloyds Bank­ing Group, mak­ing the lender the first to re-emerge from Bri­tish state own­er­ship in a sym­bolic step for the coun­try’s re­cov­er­ing bank­ing sec­tor.

The sale draws a line un­der one of the largest bailouts from the 2007-2009 global fi­nan­cial cri­sis.

This in­volved Lloyds, Bri­tain’s big­gest re­tail lender, be­ing res­cued af­ter an ill-fated gov­ern­ment-bro­kered takeover of ri­val HBOS.

“Six years ago we in­her­ited a busi­ness that was in a very frag­ile fi­nan­cial con­di­tion,” said Lloyds Bank chief ex­ec­u­tive An­to­nio Horta-Oso­rio, who joined the lender in 2011, in a state­ment yes­ter­day.

“Thanks to the hard work of ev­ery­one at Lloyds, we’ve turned the group around.”

The takeover of HBOS in 2008 caused Lloyds to suf­fer more than £25 bil­lion (RM 139.9 bil­lion) in losses, with the bailout leav­ing the gov­ern­ment with a 43 per cent state share­hold­ing.

Lloyds said in a state­ment that the gov­ern­ment will make a profit of about £900 mil­lion, hav­ing spent more than £20 bil­lion res­cu­ing the bank.

The sale will be seen as a boost to Bri­tain’s Con­ser­va­tive Party ahead of next month’s elec­tion, with the stew­ard­ship of the econ­omy emerg­ing as key bat­tle­ground.

How­ever there was crit­i­cism that this cal­cu­la­tion did not take in to ac­count in­fla­tion or fully fac­tor in the cost of bor­row­ing the money to pay for the bailout.

Wil­liam Wright, man­ag­ing di­rec­tor at New Fi­nan­cial, a think tank that pro­motes cap­i­tal mar­kets in Europe, said he cal­cu­lated the gov­ern­ment had ac­tu­ally made around a £6 bil­lion loss on the trans­ac­tion.

About half of the £137 bil­lion of di­rect cash in­jected into Bri­tain’s five bailed-out banks has so far been re­cov­ered.

Lloyds has over­hauled the way it is run since its bailout and a se­ries of high-pro­file scan­dals, scal­ing back its global foot­print and re­duc­ing its re­liance on short-term fund­ing.

The sale ends a lengthy , and at times politi­cised, gov­ern­ment dis­posal of its stake that un­der­scores Bri­tain’s bank­ing in­dus­try’s slow re­cov­ery from the 2008 fi­nan­cial cri­sis. Reuters

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