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UK govt secures 500m from Lloyds share sales

Article By: ,  Financial Analyst
March 9, 2015 1:26 PM

The UK government has recouped £500 million from Lloyds Banking Group in the latest round of share sales.

These tranactions have meant the government has reduced public ownership of the previously troubled bank to 22.98 per cent. Lloyds was rescued by the taxpayer during the 2008 financial crisis, giving the government a 40 per cent stake. It was a deal worth £20 billion and faced huge criticism at the time.

However, the government has been keen to reduce its stake and initiated the share sales in February. Since then, UK Financial Investments (UKFI), the organisation responsible for recouping the government's money, has gained £8.5 billion for the Treasury. UKFI launched a trading plan in December aimed at reducing the government ownership over the following six months.

During that period, the Treasury had a 24.9 per cent stake in Lloyds and this latest round of sales highlights that UKFI is making progress.

Chancellor George Osborne said: "These sales are part of our plan to return Lloyds to the private sector and get taxpayers' money back. The proceeds will be used to reduce the national debt."

PPI scandal

Lloyds is among a number of banks which have been subject to a huge bill for the mis-selling of payment protection insurance (PPI). A report by consumer group Which?, published at the beginning of March, showed that the total figure had now grown to £24.4 billion and affected the five biggest banks in the UK.

Alongside Lloyds, Barclays, Santander, Royal Bank of Scotland and HSBC have all set aside funds to tackle the bill. Lloyds confirmed that it has reserved £700 million for the period, bringing its total for the year to £2.2 billion.

The fine has been handed down after the various banks were found to be selling PPI on a huge scale to people who neither wanted or needed the cover.

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