The taxpayers’ stake in Lloyds Banking Group has now dipped below 2 per cent as the British government looks to return the banking giant to private hands by the autumn.
The government rescued a number of banks during the 2008 financial crisis, injecting £20.3bn into Lloyds, of which more than £20bn has now been recovered.
This comes as the bank revealed its plan to shrink hundreds of branches, meaning some will be staffed by just two people, according to FTAdviser’s parent publication the Financial Times.
Simon Kirby, economic secretary to the Treasury, said taxpayers are now “very close” to getting all their money back.
The Lloyds trading plan, which involves gradually selling shares in the market over time, initially ran from December 2014 to June 2016.
In October last year, the government announced that further sales of Lloyds’ shares would also be made.
In January, the government confirmed it was no longer the bank’s largest shareholder.
According to HM Treasury, all proceeds from the sales will be used to reduce the national debt.
Graham Spooner, investment research analyst at the Share Centre, said some investors believe the government stake has acted as a drag on the share price in a sector that is already under pressure.
He also pointed to expectations that the rest of the stake could be sold before the summer months arrive.
“Like most other banks the group has been cutting jobs and branches in order to target £1.4bn of savings, invest in digital services and products, and target a 13.5 to 15 per cent return on equity."
Mr Spooner also pointed out that the dividend for the year was raised by 13 per cent.
“The Brexit result again bought a focussed attention on the sector. This led to a raft of analyst downgrades amid concerns that the tentative steps to recovery have received a significant setback.
"We continue to recommend Lloyds as a ‘hold’ for investors seeking growth.”
katherine.denham@ft.com
