Lloyds Bank, which was bailed out by the government during the credit crunch, has been returned to private ownership with the sale of the final 0.25 per cent stake.
The government announced this morning (17 May) that it is no longer a shareholder in the bank, and that it has received a total return of £21.2bn on its investment, which more than pays back the £20bn that was spent to bail out the bank eight years ago.
At one point at the height of the financial crisis, the government owned 43 per cent of Lloyds.
Although the shares were sold at below the price that the government paid to bail out the bank, the dividend payments received by the government mean that is has more than recouped the cost.
The shares have been sold to institutions and dripped into the market via a trading plan, despite former chancellor George Osborne’s original plan to offer them at a discounted rate to the UK public.
The success story at Lloyds contrasts with Royal Bank of Scotland, which was bailed out in the same period and is still 73 per cent owned by taxpayers.
While Lloyds is profitable and restarted paying dividends two years ago, RBS continues to be loss making.
Lord Blackwell, chairman of Lloyds, said the sale "marks the final step in the rescue and rejuvenation of Lloyds Banking Group".
He said: "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."
Laith Khalaf, senior analyst at Hargreaves Lansdown, said although the period of purdah before the election stops HM Treasury "making a song and dance about the Lloyds sale" he was sure people in Westminster should hold off celebrating.
He said: "Indeed the champagne corks should probably be kept on ice seeing as the taxpayer has only broken even on the face value of the Lloyds bailout, and is still nursing a loss if you factor in the borrowing costs associated with stumping up the money back in 2009.
"RBS still casts a long shadow over the banking bailout too, seeing as the taxpayer funding package was twice as big, and the bank’s shares still need to double in price before the government breaks even.
"Progress has been slower at RBS because it had more problems to start with, and it’s difficult to see how the government can realistically sell off its 72 per cent stake in the bank without taking a financial hit."
rosie.murray-west@ft.com
