Lloyds chief says taxpayer to make £500m on bank rescue

The taxpayer will make a profit of about £500m on the £20.3bn bailout of Lloyds Bank Group during the financial crisis, its chief executive said.

Antonio Horta-Osorio told shareholders that the bank is "just days away" from returning to full private ownership.

A sale of the final 0.25% stake would be a "major milestone", he added.

The government said recently that the value of its share sales had surpassed £20.3bn, although this did not account for inflation.

Mr Horta-Osorio described 2016 as a "significant year" for Lloyds during which the government substantially reduced its shareholding in the lender.

He said: "We take great pride in the fact that the government has already received more than its original investment of £20.3bn.

"With further proceeds to come as the sale is completed, this will ensure that the UK taxpayers get back at least £500m more than was originally put in."

In 2008, Lloyds rescued HBOS but then had to seek a bailout from the government which gave the state a 43% stake on the bank.

The Lloyds boss said: "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.

"Six years on we have turned the business around and we are now a strong, safe and UK-focused bank."

Fraud

However, the bank still has to deal with the aftermath of a £245m money laundering scandal that was uncovered at its Reading office which led to the jailing of two former employees.

Lloyds has set aside £100m to compensate some 64 victims of the fraud which include Deal or No Deal host Noel Edmonds.

Mr Edmonds is seeking £50m from the fund to compensate him for the "deep distress and public humiliation" he suffered because of the scandal.

Lloyds chairman told shareholders at the meeting that he was "determined" to ensure the victims in that case were "fairly, swiftly and appropriately compensated" within "weeks rather than months".

He said: "We remain committed to learning from our mistakes and following through our strategy to be the best bank for customers, shareholders and UK."

Lloyds's progress is in marked contrast to Royal Bank of Scotland, which was also bailed out in 2008 at a cost of £45bn.

Chancellor Philip Hammond recently admitted that it is likely the government will sell its shares in RBS at a loss and it will only begin to divest once legacy issues at the bank are resolved.