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Lloyds bank: UK government sells off final shares, but did it make a profit?

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By Euronews
Lloyds bank: UK government sells off final shares, but did it make a profit?

The British government has sold its last remaining stake in Lloyds Banking Group nearly a decade after it had to be saved from collapse with billions in taxpayers’ money.

The lender is the first of those that were bailed out to end partial state ownership in a symbolic step for the UK’s recovering banking sector.

At one stage the government owned 43 percent of Lloyds having spent over 20 billion pounds rescuing it.

“Six years ago we inherited a business that was in a very fragile financial condition,” Lloyds Chief Executive Antonio Horta-Osorio, who joined the bank in 2011, said in a statement on Wednesday. “Thanks to the hard work of everyone at Lloyds, we’ve turned the group around.”

The sale of the final shares means the state made a profit of 894 million pounds (1.042 billion euros) according to the bank and the British finance minister Philip Hammond. But experts point out that calculation does not take in to account inflation or fully factor in the cost of borrowing the cash to pay for the original bailout.

William Wright, managing director at New Financial, a think tank that promotes capital markets in Europe, said he calculated the government had actually made around a six billion pound (seven billion euro) loss on the transaction.

So far about half of the money has been recovered that was used by the UK government to rescue five banks during the financial crisis. At the time the bailout cost taxpayers around 137 billion pounds.

British lenders’ long road back to public ownership contrasts with other countries such as the United States, where lenders such as JPMorgan, Bank of America and Citigroup repaid the government by the end of 2009.