Rescue of bank now on ‘final step’ says chairman
THE CHAIRMAN of Lloyds has heralded the “final step” in the financial rescue of the banking giant as it was fully returned to private hands nearly nine years after the Government bailed it out at the height of the financial crisis.
The Government’s final tranche of 638.4m Lloyds shares has been sold, marking a milestone for the lender and closing a troubled chapter for the group.
Lloyds confirmed that the taxpayer had made a profit of £894m on the original £20.3bn of cash pumped in as part of its rescue.
Chairman Lord Blackwell claimed yesterday that the sale of the final 0.25 per cent stake “marks the final step in the rescue and rejuvenation of Lloyds Banking Group”.
“The combination of our strong financial performance and the progress we have made towards our strategic priorities has enabled over £21.2bn to be returned to the Government, more than repaying the amount that taxpayers invested,” he added.
The bank pledged to continue supporting households and businesses as part of the Helping Britain Prosper plan, including a promise to create 8,000 apprenticeships by 2020, lending £10bn to first-time buyers and £2bn to small firms this year, as well as helping 100,000 start-ups.
At the peak, Lloyds was 43 per cent owned by the state after its bailout during the banking crisis.
The Government had mulled plans to shed its remaining stake in Lloyds through a retail sale, but former Chancellor George Osborne halted the attempt in January last year, blaming market turbulence.
The idea was eventually ditched altogether by current Chancellor Philip Hammond in favour of a drip-feed sale to institutional investors through a trading plan, with any profits used to pay down the deficit.
Problems emerged for the lender after former Prime Minister Gordon Brown cleared the way in 2008 for it to make a £12bn takeover tilt for HBOS to help shore up the sickly firm’s balance sheet and prevent a full nationalisation.
But these plans came unstuck when it became clear that HBOS had saddled Lloyds with heaps of toxic assets stemming from risky bets made by HBOS on commercial property during the boom years.
To ensure its future, the Government upped the bailout funds pumped into Lloyds to £20.3bn, lifting its stake to 43 per cent.
The bank returned to profit in 2013 and resumed paying shareholder dividends in 2014.
Lloyds announced last month that it had doubled its profit in the first three months of the year amid a “sweet spot” thanks to the economy’s resilience since the Brexit vote.