Government sells down Lloyds stake as PPI hits Barclays

L Protection insurance pain continues l Black Horse taxpayer stake below 9%

The taxpayer has got another £340 million back after the government cut its stake in Lloyds Banking Group to less than 9 per cent – as Barclays earmarked an extra £600m for compensation claims in the protection insurance (PPI) scandal.

Barclays’s provision, announced yesterday alongside a 35 per cent lift in thirdquarter pre-tax profit to £837m, came the day after Lloyds set aside another £1 billion for the long-running PPI affair.

The government’s Lloyds selldown means the state’s holding now stands at 8.99 per cent, with more than £17bn being returned to the Treasury since the lender’s £20bn taxpayer lifeline in the financial crash.

Chancellor Philip Hammondsaid:“sellingourshares in Lloyds and making sure that we get back all the cash taxpayers injected into it during the financial crisis is one of my top priorities as Chancellor.”

The government has progressively sold down its original 43 per cent stake in Lloyds, which also owns Bank of Scotland and Scottish Widows.

Earlier this month Whitehall ditched plans for a public share sale, amid stock market volatility and pulled flotations, opting instead to offload the stake to institutional investors.

A Lloyds spokesman said: “Today’s announcement shows the further progress made in returning Lloyds Banking Group to full private ownership and enabling the taxpayer to get their money back.

“This reflects the hard work undertaken over the last five years to transform the group into a simple, low-risk and customer-focused bank that is committed to helping Britain prosper.”

Meanwhile, the latest PPI hit for Barclays brings the bank’s total provisions for the issue over the past two quarters alone to £1bn, having set aside £400m in Q2.

The industry’s total PPI bill before a new deadline for claims imposed by the Financial Conduct Authority of summer 2019 currently stands at more than £30bn.

Barclays chief executive Jes Staley, who joined the lender last December, revealed that net operating income fell to £4.7bn in the quarter, down from £5bn last year.

He said Barclays was still focused on selling down its non-core businesses to concentrate on the US and UK. Staley added: “The growing momentum in attaining our strategic goals means we can feel optimistic of our prospects of completing the restructuring.” l Royal Bank of Scotland needs to pay “at least £2bn” to compensate 500 businesses that allegedly suffered at the hands of the bank’s former Global Restructuring Group (GRG) for SMES that got into financial difficulties, the RBS GRG Business Action Group said last night.

“The longer RBS strings this out, the greater the likely compensation bill it will face,” it said. It comes as RBS will publish Q3 financial results today.