Taxpayers may get money 
back as Lloyds shares rise

Shares in the 39 per cent state-owned bank yesterday rose above the 61.2p level at which the Government said it would break even on its 2008 bailout.

The shares are now at their highest point for two years.

The Treasury is widely expected to begin selling its stakes in Lloyds and 81 per cent nationalised Royal Bank of Scotland before the 2015 general election.

Prime Minister David Cameron recently raised the prospect of selling RBS shares at a loss.

Mr Cameron told reporters in New York on Wednesday that the Government was “open to ideas” about offloading its RBS stake, responding to speculation over a possible share giveaway.

The value of shares in Lloyds have more than doubled over the past year.

The share price has been boosted by state stimulus for the banking sector, the recovering economy and housing market, and the bank’s improving balance sheet.

Lloyds chief executive Antonio Horta-Osorio told shareholders at its annual meeting on Thursday: “We expect us to return to profitability this year and to grow our core business, to realise our full potential to deliver strong, stable and sustainable returns for you, the shareholders, and to allow UK taxpayers’ investment in the group to be repaid.”

Mr Horta-Osorio’s £1.5m shares bonus for 2012 is tied to the 61p break-even level.

The state ploughed more than £20bn into Lloyds at the height of the credit crunch after the then Labour government brokered its rescue of Halifax Bank of Scotland.

Lloyds remained in the red in 2012 with pre-tax losses of £570m after setting aside £3.6bn to compensate customers who were mis-sold payment protection insurance (PPI).

But its first quarter underlying profits surged to £1.5bn, with bad debts plunging by 40 per cent.

Lloyds chairman Sir Win Bischoff recently announced he is standing down.

Sir Win also said‘’significant progress’’ had been made in the bank’s recovery.

Speaking earlier this week, Sir Win said the bank was waiting to receive guidance from the regulator on its capital position, but was confident of its strength.

UK Financial Investments, which manages the state’s bank holdings, declined to comment yesterday.

At its own annual meeting this week, Royal Bank of Scotland said it would need another 18 months to strengthen its capital position enough to satisfy regulators.