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Lloyds set to return to private sector at a profit

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The Treasury is set to recoup its remaining stake in Lloyds Banking Group and return the bank to private ownership at a profit.

The Financial Times reports the Government is expected to offload a tranche of 1.4bn shares to sell out of Lloyds completely by the end of May.

The Treasury has a stake of less than 2 per cent in the bank. To date £20bn has been returned to taxpayers as the Government has continued to sell down its investment in the bank following the financial crisis.

The Office for Budget Responsibility has estimated that based on the bank’s share price in February, the Government would make a £100m profit from the sale.

Investec analyst Ian Gordon told the newspaper: “The sell-off is symbolic, rather than a transformational change. But even for a relatively successful profitable bank like Lloyds — and in my view it’s the only UK bank which will be generating a 10 per cent return on tangible equity before 2020 — it’s taken eight years to sell down.”

He adds: “The Lloyds story from here revolves around higher payouts as negative items — such as PPI — reduce. You could almost argue that Lloyds is returning to what it was a little over a decade ago: a high-yielding low-growth stock.”

But Lloyds’ return to private ownership is in stark contrast with the fortunes of Royal Bank of Scotland, also bailed out during the financial crisis.

The BBC reports Chancellor Philip Hammond admitted to MPs yesterday the Government may have to sell its stake in RBS at a loss. The Treasury bought a 72 per cent stake in the bank in 2008 for £45bn, with shares at 502p a share.

Shares are currently trading at 223p.

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  1. Hats off to Antonio Horta-Osorio, the CEO who has led Lloyds out of the mire of 2008/09. A brilliant leader whose team have done exactly the opposite of RBS.

    A big lemon for the Board of Lloyds TSB (Blank, Daniels, Weir and the rest), who were suckered into buying the dead duck HBOS by Gordon Brown. With no due diligence and with no idea about the basic tenets of running a bank. Shareholders will never recoup what we lost in 2009 but at least the Phoenix of LBG is back to almost a £50bn bank. Not far off ten times the worth of M&S.

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