Lloyds – problem over as government sells final stake

by | May 17, 2017

Share this article

Facebook Open Graph

With the government selling its final stake in Lloyds, the bank is now fully back in private hands and eight years later, the problem for the UK taxpayer is over.

However, some commentators point out that although the Treasury has now recouped the £20.3bn which the 2009 bailout cost, that doesn’t include the cost of borrowing the money to fund the deal.

Now there’s just that other little problem of RBS to sort out.

 
 

On Lloyds, Senior Analyst Hargreaves Lansdown Laith Khalaf told IFA Magazine:

“It’s been a long and winding road back to recovery, but finally the government has sold its last stake in Lloyds, almost a decade after the taxpayer bailed the bank out. Lloyds is now back to business as usual, and the withdrawal of a large seller from the market should be positive for the share price. It’s an interesting coincidence that one of the UK’s top fund managers, Neil Woodford, recently bought back into Lloyds after snubbing banks as uninvestable for fourteen years, just as the government is stepping out of the picture.

“The Treasury won’t be making a song and dance about the Lloyds sale, seeing as we are in a period of purdah running up to the general election. 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% stake in the bank without taking a financial hit.

“As for Lloyds the future looks more promising. PPI compensation is disappearing in the rear-view mirror and the bank is paying a healthy dividend to shareholders. Unlike the FTSE 100 as a whole, Lloyds is very much a bellwether of the UK economy because of all the loans it makes to businesses and consumers in this country, so its fortunes are very much shackled to domestic conditions.”

Share this article

Related articles

2024: Has cash lost its crown?

2024: Has cash lost its crown?

During 2023, many investors swapped their stocks and shares ISAs for cash options. But as interest rates peak, will cash retain its crown in 2024? Nick Henshaw, Head of Intermediary Distribution at Wesleyan, explains all here. The new year is a natural time for us all...

How will markets react to Rishi’s gamble

How will markets react to Rishi’s gamble

Written by Gaël Fichan, head of fixed income at Syz Group The recent announcement of a snap election in the UK on July 4th has sparked discussions about its impact on both the political landscape and financial markets, particularly the Bank of England's (BoE) monetary...

Sign up to the IFA Magazine Newsletter

Trending articles

IFA Talk logo

IFA Talk is our flagship podcast, that fits perfectly into your busy life, bringing the latest insight, analysis, news and interviews to you, wherever you are.

IFA Talk Podcast - listen to the latest episode

x