Lloyds to return to private ownership within 12 months

Published: 02/07/2015

The government is planning to sell off billions of pounds worth of shares in Lloyds Bank to retail investors, aiming to return Lloyds to private ownership within 12 months. Indeed the process has already started as the government have been drip-feeding shares in Lloyds to institutions. This activity will now be stepped up with an offer of shares at a discount to private investors. Details on the prices have not yet been finalised.

Forecasts from Investec Bank regarding Lloyd’s financial future are largely positive. Pre-tax profits are expected to jump from £1.7 billion in 2014 to £5 billion in 2015 and on again to £7.3 billion in 2016. Lloyds paid a share dividend in 2014 – the first shareholder return since 2008.

Tax-payers own a £13.6 billion stake in Lloyds. The government originally had a 41% stake in the bank but has already raised more than £10 billion from selling its shares.

Solicitor Paul Cahill commented:

“Whilst financial commentators and analysts are largely upbeat about the investment prospects that Lloyd’s shares appear to offer it’s interesting to note that they do also sound a note of caution regarding the bank’s exposure to mis sold payment protection insurance (PPI). They highlight that Lloyds has set aside more than £12 billion to cover PPI mis selling. This isn’t far short of half the £26 billion allocated by the industry for mis sold PPI.

"With many people still contacting Lloyds to reclaim mis sold PPI this scandal could yet affect the bank’s profits adversely. Those looking to invest should take account of this when assessing the potential of this opportunity.”