The taxpayer stake in Lloyds Banking Group has fallen below 24% as it prepares to pay its first dividend since the 2008 financial crisis and hand its top management team more than £25m in bonuses.
The body that controls the taxpayer stake in the UK’s bailed-out banks had already announced that it would drip-feed shares into the market in the runup to the general election and aim to reduce its stake to 20%.
Lloyds announced on Monday that UK Financial Investments had activated the first sale under the process ahead of the publication of the bank’s 2014 results on Friday.
In 2008 and 2009, when the government pumped £20bn into Lloyds after it rescued HBOS, the taxpayer was left with 43% of the enlarged bank. The £500m sell-off means that the government has received £8bn from the bank, the chancellor, George Osborne, said.
When Lloyds publishes its results, it is expected to announce that it will resume dividend payouts to shareholders for the first time since the crisis, when it was blocked from making such payments under the terms of its bailout and also lacked the financial muscle to do so.
It is also expected to confirm that the chief executive, António Horta-Osório, who is planning 9,000 job cuts and 200 branch closures, has met the terms of a share bonus handed to him in March 2012. The Portuguese banker stands to receive £7m and other members of his executive team up to £23m.
The shares were awarded when the price was 34.7p, but the value has now increased to over 75p. The taxpayer paid an average of 73.6p for its shares.
Osborne said of the latest reduction in the stake: “This is further progress in returning Lloyds Banking Group to private ownership, reducing our national debt and getting taxpayers’ money back. The trading plan and its success are only made possible by our long-term economic plan, which is delivering a more secure and resilient economy.”
A spokesperson for Lloyds said also said the bank was demonstrating its ability to get taxpayers’ money back. “This reflects the hard work undertaken over the last four years to transform the group into a low-risk and customer-focused bank that is committed to helping Britain prosper.”
