Lloyds Banking Group 'April share sale likely'

Lloyds Bank sign Lloyds Banking group has not paid dividends to shareholders since 2008

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Lloyds Banking Group has confirmed it plans to return more of the government's 32.7% stake to private investors.

The news came as it made yet another hefty provision of £1.8bn for mis-selling payment protection insurance (PPI) taking the total to £10bn.

The government sold 6% of its original 39% stake to large investors last year.

The BBC's business editor, Robert Peston, says the first Lloyds sell-off is likely to be in April.

It cannot take place before the group's annual report and accounts are published in March.

Our correspondent says this year could see a two-part sale, the first aimed at professional buyers with a later offer pitched at small investors.

Holding up

This could amount to another slice of 10% of Lloyds' shares, and is likely to outstrip that of last year's £3.3bn Royal Mail flotation, when demand was many times that of the number of shares on offer.

The 6% stake in Lloyds that went to large investors raised £3.2bn alone.

Lloyds has a market value of about £57bn, so at the current share price, selling 10% would raise £5.7bn.

Lloyds Banking Group's shares fell nearly 4.3% in afternoon trading to 79.66p, however, they remain more than 56% up over the last 52-week period.

The government paid 73.6p for its stake.

It wants to return it to full private ownership by the next general election in 2015.

Dividend

Although the bank increased the amount it set aside for past misdemeanours, it also said underlying profits for 2013 would be £6.2bn - nearly double what analysts have been expecting.

The bank added that the regulator, the Prudential Regulation Authority, would now consider allowing Lloyds to resume making dividend payments, given the group's improved financial performance.

Lloyds has not paid any dividends to shareholders since 2008.

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There will be a proper mass-market "Sid" privatisation for many billions of pounds more, probably in the autumn, with a huge marketing campaign aimed at individuals”

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"Modest" dividend payments would probably begin in the second half of 2014, the bank said.

'Badge of shame'

Lloyds' PPI costs now total a potential £9.825bn. For all banks the bill is approaching £20bn.

But BBC business editor Robert Peston argues that despite these provisions being "an extraordinary badge of shame" for the banks, the payouts have actually helped stimulate the UK economy.

"These PPI payments have played a very big role in encouraging economic recovery," he told BBC Radio 4's Today programme.

Lloyds said it would be setting aside a further £130m relating to the sale of interest rate hedging products to small and medium-sized businesses.

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  1.  
    07:42: Lloyds Banking Group
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    How much in total has the PPI scandal cost the bank in the past few years? An truly extraordinary £12bn. Not all of that is compensation. The administrative costs of sorting out the payments has been expensive too.

     
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  3.  
    07:27: Lloyds Banking Group

    The bank has had to set aside another £2.2bn to cover the continued cost of repaying customers who were mis-sold payment protection insurance (PPI). That was on top of the £3.1bn the year before.

     
  4.  
    07:21: Lloyds Banking Group
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    The massive payment to chief executive Antonio Horta-Osorio includes £1m in basic pay and an £800,000 bonus. The rest of the £11m comes from the payout of a "long term incentive plan" which gives him shares in the bank as a reward for steering it out of near insolvency.

     
  5.  
    07:19: IAG results

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  6.  
    07:15: Via Twitter Kamal Ahmed BBC business editor

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  8.  
    07:06: Lloyds Banking Group

    The dividend will be 0.75p per share, totalling £535m, which will go to three million shareholders. And that means £130m goes to the government.

     
  9.  
    07:02: Lloyds Banking Group

    The annual results are out. It has announced pre-tax profits of £1.8bn - up from £415m a year ago - and will indeed resume paying a dividend to shareholders.

     
  10.  
    06:50: Lloyds Banking Group BBC Radio 4

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    06:00: Ian Pollock Business reporter, BBC News

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  16.  
    06:00: Good morning Tom Espiner Business reporter

    Some interesting stories coming up today. Expect full year results from Lloyds Banking Group, which is expected to resume paying a dividend to shareholders for the first time since the financial crisis in 2008. British Airways owner IAG is to post its full year results too.

     

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