Lloyds pledges to beat dividend ban
Nearly 3million shareholders of the enlarged Lloyds TSB and HBOS bank could receive dividends next year after it found a way round the ban on payouts following the Government’s bail-out package.
Lloyds TSB said it expected to resume payments to both sets of shareholders in 2009 after repaying taxpayers’ cash at a “spectacular” profit.
The bank made the pledge yesterday as it unveiled details of its £12billion takeover revealed two months ago.
It marks a breakthrough for the 2.7million private investors and City funds that were told the Government’s planned purchase of £4billion-worth of preference shares in the two banks was conditional on a ban on dividends for as long as five years.
The news was revealed as Lloyds TSB published documents detailing the tie-up and £17billion of fund-raising.
Lloyds TSB chairman Sir Victor Blank said the Government did not want to see restrictions on payouts once the preference shares had been repaid, and added the company had found “a clear path to dividend resumption”.
Chief executive Eric Daniels said the Government would be “handsomely rewarded” for its investment and added: “It will make what we hope will be a spectacular return for taxpayers.”
The enlarged company would be able to repay the £4billion by tapping other investors, selling assets and improvements in its capital position. Daniels declined to comment on speculation that Lloyds could turn to foreign funds.
The enlarged bank will be called Lloyds Banking Group but no decision has been made on whether that will become its name on the high street.
Savings from the deal are now expected to be £1.5billion over three years, against £1billion previously forecast, but no details of job losses were given.
Daniels remained defiant about staff bonuses, saying Lloyds TSB’s 70,000 staff “work incredibly hard”. Directors have agreed to take any bonus in shares.
Lloyds TSB shares were unchanged at 197fp and HBOS rose 6p to 105dp.
