The Government has sold its last remaining stake in Lloyds Banking Group, meaning the lender has been returned entirely to private ownership.
In a stock market announcement, both the bank and the Government confirmed that a deal had been done to sell the final 638,437,059 shares that lay on the Treasury’s books.
At a price of around 70p per share, that should have raised around £466m.
It comes hours after the stake sale was first reported by Sky News, following the Treasury’s disposal of its final shares in Tuesday’s trading session.
Shares rose 2% following the announcement.
Lloyds said the gradual sale of the Government’s stake had returned £21.2bn to the taxpayer, about £900m more than the initial investment, including more than £400m in dividends.
However, figures published by the Office for Budget Responsibility (OBR) in March suggest that, taking account the cost of extra borrowing to pay for the bailout, the balance of profit to the Treasury would be closer to £100m.
The bank’s chief executive, Antonio Horta-Osorio, said his team had inherited the bank “in fragile condition” but added: “We’ve turned the group around.”
Chancellor Philip Hammond said it was a “major achievement” and “another example of the work being undertaken to return Britain’s financial sector to normal following the financial crisis and putting Britain on a sound economic footing”.
The announcement will not affect the running of this bank, but it does carry a great symbolic importance.
The Government has owned a stake in Lloyds since October 2008 and at its high point held 43% of the lender – which includes Halifax Bank of Scotland (HBOS) as well as Lloyds Bank.
It pumped more than £20bn into the bank as part of an extraordinary rescue package for the banking sector.
The Treasury has been gradually selling down its stake since 2013, with successive Chancellors agreeing that they saw no long-term point in the Government owning banks.
The former Chancellor George Osborne had promised to sell a huge tranche of the Government’s Lloyds stake to the public, but that plan changed last year when the proposal was shelved because of turbulent market conditions.
Mr Osborne’s successor, Philip Hammond, then decided that a sale to institutional investors would be quicker, easier and more effective.
The bailout of Lloyds, as well as an even more expensive rescue package for RBS, came at a time of turmoil for global business.
Lloyds had recently completed a hastily-constructed takeover of HBOS, a deal that hugely increased the size of the Lloyds Banking Group but also lumbered it with HBOS’s debts and complex web of liabilities.
In particular, HBOS had a hefty raft of commercial property loans that were beginning to unravel spectacularly in time with the global financial downturn.
Those issues, combined with the worsening effects of the financial crisis, pushed Lloyds into seeking unprecedented support.
The bailouts were sanctioned after emergency meetings involving the Government, regulators, commercial banks and the Bank of England.
A more extreme option of fully nationalising both Lloyds and RBS was considered, but rejected.
Those bailouts infuriated many, who saw them as a way of getting taxpayers to cover the excesses and mistakes of overpaid bankers.
But most politicians and economists say that the emergency support was necessary to ensure the British economy did not suffer a savage, and potentially catastrophic, collapse.
Mr Horta-Osorio took over as the chief executive of Lloyds in 2011.
He was confronted by such a horrible corporate mess that, six months later, he took time off for fatigue, having admitted that he had, at one point, worked for five days without sleep.
He has overseen a restructuring that has seen the bank become smaller and less exposed to risky investments.
It has not come without pain – some 57,000 jobs have been cut by Lloyds, branches have been shut and the bank has had to deal with a spiralling bill for PPI compensation.
There have also been fines from regulators, and the share price has barely moved for the past four years.
But Lloyds is now paying dividends, and making a profit.
Compared to RBS, it is in rude health.