UK taxpayers are expected to make a profit of at least £500 million from the government’s bailout of Lloyds Banking Group, shareholders have been told.
Bosses at Lloyds’ annual general meeting (AGM) in Edinburgh confirmed the UK government’s stake in the Bank of Scotland owner now stands at 0.25 per cent, meaning the group’s return to full private ownership is “just days away”.
We are just days away from a major milestone as the group returns to full private ownershipAntonio Horta-Osorio
Chief executive Antonio Horta-Osorio described the development as a “major milestone” in efforts to turn the banking group around from the “crisis” it faced a few years ago.
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At its peak, Lloyds was 43 per cent owned by the state after the government spent £20.3 billion of taxpayers’ cash to bail it out at the height of the financial crisis. The AGM came just weeks after ministers announced they had recouped all of the £20.3bn ploughed in.
Addressing shareholders at the Edinburgh International Conference Centre, Horta-Osorio said: “2016 was also a significant year for the group as the UK government substantially reduced its shareholding.
“We are now just days away from a major milestone as the group returns to full private ownership. We take great pride in the fact that the government has already received more than its original investment of £20.3bn.
“With further proceeds to come as the sale is completed, this will ensure that the UK taxpayers get back at least £500 million more than was originally put in.”
The chief executive told the gathering the business has been turned around from the time when it acquired £200bn of “toxic assets” from its takeover of HBOS and had a “significant” payment protection insurance (PPI) problem.
“Looking at the group now, it is perhaps easy to lose sight of the fact that just six years ago this was a bank in crisis,” he said.
“Six years on we have turned the business around and we are now a strong, safe and UK-focused bank.”
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Chairman Lord Blackwell told the AGM that 2016 was a notable year for Lloyds as it strengthened its capital position and accelerated the process of returning the group to private ownership.
“Everyone who works for the group is conscious of the enormous debt we owe to taxpayers for the financial support we received following the financial crisis and it is a source of pride that we have been able to restore the bank to financial health and repay the taxpayer for their support,” he said.
“We expect the final sale of the government’s remaining stake to be completed relatively soon and, as of this morning, I’m told they’re down to just 0.25 per cent ownership of the company’s shares.”
Lloyds last month announced that profits have doubled in the first three months of the year amid a “sweet spot” thanks to the economy’s resilience since the Brexit vote. The lender posted first-quarter pre-tax profits of £1.3bn, up from £654m a year earlier.
This came despite the bank being forced to set aside £350m to cover mis-sold PPI claims and £100m to cover compensation for victims of fraud by former HBOS staff.
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During the AGM, Lloyds chiefs faced questions from shareholders about the handling of that fraud case. It came after a group of corrupt financiers were jailed for carrying out a £245m loans scam. The case dates back to the time before Lloyds took over the HBOS business.
Blackwell told the gathering he is “determined” the victims in that case are “fairly, swiftly and appropriately compensated” now that the trial has finished. He clarified that that meant within “weeks rather than months”.
The chairman said: “We remain committed to learning from our mistakes and following through our strategy to be the best bank for customers, shareholders and UK.”
He told one questioner: “You have our full sympathy for what you’ve been through and I’d like to express our regret and apologies for what happened in HBOS at that time.”
On Wednesday, Noel Edmonds launched a £50m compensation claim against Lloyds, with the Deal Or No Deal star claiming he has suffered “deep distress and public humiliation” caused by fraud at the hands of former HBOS Reading staff. Edmonds claims that a convicted former HBOS employee helped destroy his business Unique Group.
Following the AGM, his lawyer Jonathan Coad, from Keystone Law, said: “Lord Blackwell has said today at the Lloyds AGM that it is Lloyds’ intention that the victims of the HBOS frauds should receive their compensation ‘within weeks’. Lloyds has already appointed Professor Griggs to assess that compensation.
“My letter to Mr Horta-Osorio was sent some three weeks ago. But I am still waiting to hear from Professor Griggs or anyone in his office. So, at the moment the bank does not appear to be delivering on the promises that it is making to its shareholders and the general public.”