Lloyds Banking Group has been freed from partial state ownership for the first time in almost a decade with the Government set to confirm it has sold its remaining holding in the UK’s biggest high street lender.
Sky News understands that the Treasury offloaded its final shares late in Tuesday’s trading session.
An announcement from Lloyds that UK Financial Investments’ (UKFI) has sold its entire shareholding is expected to be made before the market opens later, according to City sources.
The news will represent a milestone in Britain’s efforts to shed the toxic legacy of the 2008 financial crisis, when banks including Lloyds were bailed out with tens of billions of pounds in capital injections – and even larger sums in behind-the-scenes central bank support.
Lloyds merged with the stricken HBOS – then the UK’s biggest mortgage lender – but the deal initially proved to be disastrous because of the sheer scale of bad loans on the combined group’s balance sheet.
Ministers injected more than £20bn into Lloyds, giving the Government a 43% stake that has steadily been reduced over a near-four year period since the autumn of 2013.
Last week, Lloyds bosses told shareholders at the bank’s annual meeting that the Government’s stake was down to about 0.25% – with the entire disposal programme expected to have netted taxpayers a profit of roughly £500m.
Philip Hammond, the Chancellor, used a Treasury press statement on 21 April to trumpet the recovery of taxpayers’ full £20.4bn investment in Lloyds.
Mr Hammond, who is standing in next month’s General Election, is expected to claim credit for the Conservatives when the final stage of the sell-off is confirmed.
He is likely to face criticism from political opponents when he does so, however, with Labour likely to point out that it was Gordon Brown’s administration which determined the price of the bank’s rescue.
Labour is also likely to point to the much larger loss on which the Government is sitting in relation to its 72% stake in Royal Bank of Scotland.
Lloyds itself is expected to say that the completion of the privatisation process will not herald any change in its strategy.
Antonio Horta-Osorio, the chief executive since 2011, has overseen a significant turnaround in Lloyds’ fortunes despite a £17bn bill for payment protection insurance mis-selling.
Lloyds has now started to generate substantial profits and underlined its renewed confidence earlier this year with a deal to acquire MBNA, the giant credit card business.
Lloyds, the Treasury and UKFI declined to comment on Tuesday.