THE chief executive of Lloyds has declared that the bank is ready for the UK government to sell off its 39 per cent stake in the bailed-out institution.
Antonio Horta-Osorio indicated that it was time for Lloyds Banking Group to be reprivatised when he announced it had achieved half-year profits of £2.1 billion, a figure that contrasted with the losses of £456 million this time last year.
The improved performance saw shares increase in value by 8 per cent to around 74p last night, a value that would see a sell-off giving taxpayers a “paper profit” of about £3.5bn.
For every 1p the Lloyds Banking Group share price is above the 61p average buy-in price, the taxpayer makes a profit of about £275m.
Mr Horta-Osorio said it was now up to the UK government to decide “when and how” to sell off its stake.
“I do believe that we have delivered on our part and the government can now start to sell the shares,” Mr Horta-Osorio said.
He added that it was not for the bank to suggest the timing of any sale of the taxpayers’ stake, but added: “You have to ask the government. [It] now has the clear chance of giving taxpayers a profit. We have done our part and now the ball is in their court.”
Mr Horta-Osorio, who joined Lloyds in 2010, twow years after the bailout following its disastrous acquisition of Halifax Bank of Scotland (HBOS), said the group was now in a far healthier position: it was profitable, bad debts were well down and its capital cushions were stronger.
He added: “In the two years since we set out our strategic plan to become the best bank for customers, we have transformed the group with increasing momentum.”
The recovery also saw a 43 per cent plunge in bad debts to £1.8bn.
The Treasury responded to the results by confirming that it was “actively considering options for sales” of the public’s shares in the bank, which was rescued from the brink of collapse by a £20bn taxpayer bail-out.
However, Chief Secretary to the Treasury Danny Alexander said that a timetable had yet to be decided for the public to get its money back.
Interviewed by the BBC, Mr Alexander said: “We haven’t set a fixed timetable for this and, as I say, we’re not going to rush it.
“I think these results are welcome as a sign that the bank is continuing on the right path of returning to health, but we’re going to judge this carefully on the basis of the evidence.
“We’ll be making progress on this when we can be confident that it will be the start of a process through which the taxpayer gets money back.
“The British taxpayer has invested billions of pounds in the banking system in order to rescue it from catastrophe, and we need to make sure that the taxpayers’ commitment is returned as we return these banks to the private sector.”
Lloyds also flagged up another milestone in its return to health yesterday, saying it would hold talks with regulators in the second half of 2013 over a timetable for reviving shareholder dividend payouts. It has not paid a dividend since mid-2008.
The improved figures resulted in the bank’s stock rising 8 per cent yesterday, jumping 5.5p to 74p.
Last night, the Scottish Government advised its UK counterpart that decisions on the future of the group should be based on “long-term financial stability and maximising value for taxpayers’ investment, not the short-term pursuit of profit or political expediency”.
A Treasury spokesman said: “[Yesterday]’s half-year results show that Lloyds continues to make progress towards becoming a stronger and safer bank.
“The government has set out its plan to take Britain’s banking system from rescue to recovery.
“As part of this, we have said that we are now actively considering options for sales of the taxpayers’ shares in Lloyds.
“We have also consistently said we have no set timetable or target share price for beginning the return of Lloyds to the private sector, and ensuring value for money for the taxpayer will continue to be the overriding consideration for any sale.”