Lloyds returns to profit

By politics.co.uk staff

Lloyds TSB has returned to profit, marking an important day in the road to recovery for the taxpayer-owned bank.

Meanwhile, shares in RBS have jumped by 75% in the past quarter and the exchequer is now looking at a £10 billion profit on the shares it owns in both banking groups.

The 84% stake in RBS owned by the public should deliver a profit of £9.4 billion and the 41% government stake in Lloyds is worth £2 billion more than when the Treasury bought it.
At the end of 2009, the combined stake was at a loss of £26 billion.

Some banking analysts have said that an incoming chancellor may be tempted to sell off the public stake to be able to pay off some of the country’s deficit.

Alistair Darling, who authorised the buy-outs, said: “My judgment was right … I’ve always said we would get our money back and more.

“The shares have moved into the black rather earlier than people thought. But our policy remains to sell when the time is right.”

But the Liberal Democrats said the priority should not be to make a quick sale but force the banks to up their rate of lending to small and medium businesses.

Vince Cable, the party’s Treasury spokesman, said he would “definitely hold on to the shares. On previous occasions it has taken a decade to turn the banks properly around.

“It was wrong to put too much emphasis on the short-term share price rather than the important role the banks should have in supporting the economy. They are building up capital which they don’t need because they are semi-nationalised at the expense of good companies. There is a serious tradeoff here.”