Lloyds says government could get bail-out cash back in 2 years

Chief executive Antonio Horta-Osorio told shareholders at the annual meeting in Edinburgh that he had made a full year’s progress on his three-to-five-year plan to return Lloyds to past levels of profitability, and laid out a strategy to concentrate on “iconic brands” such as Scottish Widows.

“Scottish Widows continues to be a core part of our business,” he said. “We see significant advantages in having an integrated business in insurance.”

Horta-Osorio also emphasised that Lloyds was pulling out of international locations where it “lacked scale and strategic logic” and would be focusing on the UK. He said the health of the group was tied to the British economy and its scale was such that it could help the country back to growth as it boosted business lending.

As a result of its largely domestic, retail-focused operations, he said 90 per cent of the bank would be “inside” the proposed firewall to separate high street banks from their riskier investment divisions.

All motions proposed at the meeting, including the directors’ remuneration report and the re-election of all the board members, were passed with at least 97.7 per cent approval, though there was dismay at the collapse in the share price, which has lost around half its value in the past year.

Chairman Sir Win Bischoff later told The Scotsman that the bank was confident it could restore its shares to a level where the UK government could sell its 40 per cent stake at a profit – around 74p at upper estimates.

There were reports yesterday that the bank was looking to sell off a £1.2 billion portfolio of loans taken on as part of its disastrous merger with HBOS in 2008.

Lloyds is understood to have hired the investment banking arm of Barclays to oversee an auction of about 50 debt positions, including the bank’s exposure to companies including housebuilders Crest Nicholson and McCarthy & Stone.