Woodford gambles £200m on Lloyds – even though he promised never to bet on banks!

star fund manager neil Woodford is famous for never betting on banks.

it was a gamble that paid off when the financial crisis came, and all his rivals saw their funds plunge.

But last night Woodford, 56, caused a stir on City trading floors when he snapped up £200m of shares in Lloyds Banking Group.

He has largely avoided banking stocks for the last 14 years due to their high levels of debt and large fines in the wake of the financial crisis. But the industry veteran said his confidence in banks has been restored by their rehabilitation since the financial crisis and the UK economy’s increasing health. This week the Government’s stake in Lloyds fell to 0.25pc – meaning it is just days away from fully returning to private hands. and it is also about to complete a £2bn deal to buy MBna credit cards.

‘Specifically, we view Lloyds as a well-managed with a conservative approach to its balance sheet,’ said a spokesman for Woodford investment Management, the manager’s boutique investment firm. ‘its valuation looks very attractive, and it has the ability to pay a very healthy and growing level of dividend.’

it is now the 11th biggest position in the manager’s flagship £10bn UK equity income fund. His purchase came just a day after Lloyds said taxpayers will gain at least £500m in profit as the Government sells its remaining stake in the bank over the coming days.

Woodford, who made his name at invesco Perpetual before leaving in 2014, had a brief foray with the banking sector three years ago when he bought shares in HSBC. But he sold just months later on growing fears it would face large fines for fixing lending prices.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said Woodford’s return to the banks suggests they are finally returning to business as usual.