Why RBS's recovery is lagging Lloyds'

Lloyds' black horse logo Image copyright Getty Images

Eight years ago the government rescued Lloyds by taking a 43% stake for just over £20bn.

The fact that the government is no longer even the biggest shareholder marks an important return to near normality.

Since 2013, the government stake has been sold off at first in a couple of big chunks and then in a gradual trickle and so this moment was bound to happen at some stage.

The government still owns nearly 6%, but global investor Blackrock now eclipses that and Lloyds is on trajectory to return to full private ownership later this year when taxpayers should recoup all the money they put in.

It hasn't been an easy ride. The huge compensation costs of PPI mis-selling and intermittent market turbulence have hampered and delayed the process, but Lloyds, while not risk-free, can be considered pretty much out of the woods.

As a plain vanilla UK savings and lending bank, Lloyds was always going to be an easier bank to fix than RBS which is still about 71% owned by the taxpayer.

As a global bank with fingers in most of the pies that got burnt during the crisis, RBS has paid out over £50bn in fines and compensation and has its biggest reckoning yet to come.

It is still facing a bill from US authorities which could end up in the double digit billions for its role in the subprime mis-selling scandal that started the whole financial crisis in the first place.

While those negotiations could come to a head as early as this week (watch out for separate blog on this), RBS won't reach the point Lloyds did today for many, many years to come.