Lloyds Returns to Full Private Ownership

The long journey under government ownership is now over for high street bank Lloyds

Derya Guzel 17 May, 2017 | 3:07PM
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With the U.K. government selling down most of its stake in Lloyds (LLOY) during 2016, its remaining share stood below 5% at the beginning of 2017. With the latest sale, Lloyds is now a fully privately owned bank, leaving Royal Bank of Scotland as the last bank still majority-owned by the government following global financial crises. While this sale was mostly expected by us and the market, this is a positive development, both from the perspective of shareholders and in terms of commercial independence.

We don’t anticipate changes in dividend policy

That said, we believe that it will be business as usual for management, and we don’t anticipate changes either in dividend policy or risk-taking approach after the government exit, which was usually perceived to have had control over management decision making. As Lloyds returning to full private ownership was part of our base case, we're maintaining our fair value estimate and narrow moat rating for the bank. The bank's shares look undervalued at current levels.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Lloyds Banking Group PLC45.05 GBX0.61Rating

About Author

Derya Guzel  is an Equity Analyst for Morningstar

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