After bailing out the British bank for £20.3bn in 2009, the government finally relinquished its final shares in Lloyds on Wednesday, signalling the bank’s return to private ownership.
However, the Treasury has yet to recoup the full sum it needed to borrow in order fund the bailout.
Though the “largely symbolic sell-down” was widely anticipated, it marks “an important milestone in the rehabilitation of the bank,” said Quilter Cheviot bank analyst William Howlett.
The news was welcomed by a 2.7% bump up in the bank’s share price to 72.1p on the day, returning it to pre-Brexit levels.
And shortly before the government sold down its final 638,437,059 shares, UK fund managers were showing a renewed interest in the FTSE 100 bank.
As Hargreaves Lansdown senior analyst Laith Khalaf points out: “It’s an interesting coincidence that one of the UK’s top fund managers, Neil Woodford, recently bought back into Lloyds after snubbing banks as uninvestable for fourteen years, just as the government is stepping out of the picture.”
There are reasons to be positive on the stock’s prospects, as “PPI compensation is disappearing in the rear-view mirror and the bank is paying a healthy dividend to shareholders,” said Khalaf.
And compared with other peers in the sector, Howlett said one of the key differentiators is the fact that “Lloyds is managed well.”
“At the heart, you have a very profitable bank there,” he said.
