Lloyd Banking Group plc (LON:LLOY) chief executive, Antonio Horta-Osorio, has told shareholders the bank is on track to return to full private ownership within days.
Speaking at the bank’s annual general meeting in Edinburgh, he said the government will make at least a £500mln profit from its bailout of Lloyds.
"We take great pride in the fact that the government has already received more than its original investment of £20.3bn," he said.
Chairman Norman Blackwell said the government’s stake was now down to just 0.25% from 43% when the government bailed out the bank during the 2008-09 financial crisis.
The £500mln estimated profit from the sale of the taxpayer’s holding is higher than the £100mln the Office for Budget Responsibility had predicted in March. It comes in contrast to 72%-state owned Royal Bank of Scotland, which is expected to see taxpayers make a loss on its return to privatisation.
UK Financial Investments Limited (UKFI), which manages the government's stake, resumed the sale of Lloyds shares in October. The sale was suspended for almost a year after market challenges sent banking shares lower.
"Looking at the group now it is perhaps easy to lose sight of the fact that just six years ago this was a bank in crisis," Horta-Osorio said.
Horta-Osorio looking for new job?....
Ahead of the annual meeting, rumours that Horta-Osorio would start looking for another job once the government completes its sale of Lloyds’ shares.
READ: Lloyds boss Antonio Horta-Osorio said to be hunting for new job ahead of AGM
The lender is said to be drawing up contingency plans in case he leaves with Finance Director George Culmer expected to step in temporarily if that happens.
Horta-Osorio has been suggested as a possible replacement for HSBC’s outgoing chief executive Stuart Gulliver, who departs next year, The Times reported.
Since joining the bank in 2011, Horta-Osorio has helped breathe life back into Lloyds following the financial crash. Horta-Osorio said the group has offloaded some £200bn of toxic loans acquired following its takeover of HBOS in 2009 and removed more than £100bn of "cheap but very dangerous" short-term wholesale funding.
“Six years ago, this was a bank in crisis,” he said. “We are now a strong, safe and UK focused bank.”
However, Blackwell told shareholders there was still plenty of work left to be done.
“There is no sense of complacency here that the job is done… we recognise there is still a lot to do to transform this bank.”
Lloyds still dogged by misconduct issues...
Lloyds is continuing to tackle misconduct issues, including a £17.4bn compensation bill for mis-selling payment protection insurance. The bank has also set aside a £100mln provision to reimburse victims of fraud at HBOS's Reading branch, in which struggling businesses suffered big losses before Lloyds bought the lender. Six people, including two former HBOS employees, were jailed for the scandal earlier this year.
The Financial Conduct Authority is still investigating the issue while Lloyds is also conducting an internal review into what its executives knew about it after it bought HBOS.
Shareholder calls on chairman Blackwell to resign...
Blackwell said the £100mln set aside for compensation was "in no way a cap" on what Lloyds could eventually dish out to HBOS Reading victims.
The chairman was called to resign by one shareholder embroiled in the legal dispute with Lloyds, claiming that the bank, along with PwC, were responsible for sending his business Premier Motor Auctions into collapse.
Blackwell said "we have a difference in point of view" about Premier and that a decision on the matter will be made in court.