António Horta-Osório could be in line for more than £2.2m as chancellor claims part selloff is sign of improving economy
António Horta-Osório the boss of Lloyds Banking Group, is in line for a bigger than expected bonus after the government sold off the first tranche of its stake in the bailed-out bank for a £60m profit.
The Lloyds chief executive stands to collect more than £2.2m if the shares stay above 73.6p – the price paid by taxpayers for their stake during the 2008 bank bailouts – for 30 consecutive days or if the government sells off a third of its stake above 61p, the price the shares were trading at during the bailouts.
His bonus, when it was awarded in March, was originally worth £1.5m but it has steadily increased in value as the 3m shares he was awarded have risen from 49p to 74.65p – the level they closed at on Tuesday night after the government sold off 15% of its holding. He will receive the shares in 2018 if the requirements are met.
The share sale, which leaves the taxpayer with a 32.7% stake, down from 38.7%, prompted George Osborne to claim the economy had turned a corner and to insist he would get back the entire £65bn of taxpayers' money ploughed into the banks to keep them afloat in 2008- 2009.
The share sale came five years to the day after Lloyds TSB rescued HBOS to create the enlarged group. UK Financial Investments, the government body that looks after the stakes in the bailed-out banks, said the 6% stake – some 4.2bn shares, worth £3.15bn – was placed with major investors at 75p a share. Some £45bn of the £65bn bailout cash was used to prop up Royal Bank of Scotland but a sale of the taxpayer's 81% stake is being delayed by a review of whether to hive off a bad bank.
Osborne tweeted: "Confirm have sold 6% of Lloyds shares at 75p. Profit for taxpayer & important step in plan to get their money back and repair economy."
He later spent part of the day with Horta-Osório at one of Lloyds' operations in Birmingham. "If you look at what has happened over the last 12 hours with Lloyds, you have investors from around the world investing in a British bank. That is a sign the British economy is turning a corner," he said.
"Five years ago the previous government forced British taxpayers to put a huge sum of money into bailing out the banks. That was a big ask of the British public. I have been determined ever since I became chancellor to get that money back for taxpayers."
The chancellor said the money would be used to reduce the national debt by £586m, based on the 61p value of the Lloyds stake in the nation's accounts.
Ian Gordon, banks analyst at Investec, said the government may now be able to sell off its entire stake before the May 2015 general election.
He said: "Many aspects of government/Bank of England policy – [such as] the 'Funding for Lending' scheme, which caused the collapse of retail savers' interest rates, and overt support for the housing market through the 'Help to Buy' scheme – have been distinctly positive for Lloyds".
The biggest block of buyers for shares was saidHalf the shares are understood to have been sold to UK investors, with 30% going to the US and 20% to other international buyers.
The government has promised not to sell off any more Lloyds shares for 90 days and there is little expectation of a quick sale of RBS while the review into whether to a create a bad bank is under way.
But analysts at Jefferies reckoned it might yet be possible. "UKFI's sale of 6% of Lloyds in a simple manner is unequivocally positive for that bank and also for RBS, in our view."
Article Source : http://www.guardian.co.uk
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