The government is no longer the largest investor in Lloyds Bank, after it reduced its stake to below six per cent for the first time since it was bailed out in the financial crisis.
The stake now comprises 5.95 per cent of the FTSE 100 bank. The sale means that over £18bn of taxpayer money has now been returned – after the £20.3bn part-nationalisation.
US investment manager BlackRock is now the largest investor. It owns a stake in the bank bigger than five per cent, according to an earlier regulatory filing.
The proceeds of the sale will go towards paying off the national debt, which ballooned as government stepped in during the financial crisis. Lloyds was bailed out in October 2008 as the government pumped money into the British banking sector to avoid its collapse.
The government has since steadily reduced its holdings from October, when the Treasury owned 6.5bn shares, or 9.1 per cent of the bank – down from a 43 per cent peak – according to UK Financial Investments, the government body tasked with managing government stakes in Lloyds and RBS.
Chancellor Philip Hammond said:
Returning Lloyds to the private sector and recovering all of the cash the taxpayer injected into the bank during the financial crisis is a priority for the government.
Confirmation that we are no longer the largest shareholder in the bank and that we’ve now recouped over £18 billion for UK taxpayers is further evidence that we are on track to recover all of the £20 billion injected into the bank during the financial crisis.
Antonio Horta-Osorio, chief executive of Lloyds Banking Group, said: “Today’s announcement that the UK government is no longer our largest shareholder is a key milestone in the journey of Lloyds Banking Group back to full private ownership, returning taxpayers’ money at a profit.
“It also reflects the hard work undertaken by everyone at Lloyds over the last five years to transform the Group into a simple, low-risk and customer-focused bank that is committed to helping Britain prosper,” he added.
Lloyds shares were quoted at 65.9p before the London open on Monday, before falling to 65.3p in early trading.
This is below the 73.6p level which was previously considered to be the break-even point for the government. However, a mixture of fees and dividends have made the disposal more attractive for the government.
The government previously reduced its stake with two offerings to institutional investors in 2013 and 2014, bringing the stake to 24.9 per cent.
The government has recently upped the pace of its sales, with Philip Hammond one of the driving forces after he assumed office as chancellor in July. Last month the government announced its stake had fallen below seven per cent.