Peston: Lloyds to repay £4billion

tomterm8

http://www.bbc.co.uk/blogs/thereporters/robertpeston/

Far be it from me to spoil this government's quite astonishingly consistent run of bad news, but there is something mildly positive to say about taxpayers' massive investment in those bashed up banks.

On Monday, and barring an unexpected and improbable disaster, the Exchequer should see approximately £2.3bn returned of the capital it invested in Lloyds Banking Group last autumn.

Or to put it another way, we as taxpayers will get £2.3bn back. Hooray.
Now I know £2.3bn is peanuts in the context of the eyewatering £175bn the Treasury expects to borrow this year (and many economists believe the deterioration in the public finances will be even worse).
But as Tesco might put it, every billion helps.

....

When this repayment happens, the UK government will be the first government in the world to retrieve some of the cash that's been invested in banks to rescue them from collapse.

(note, they repay £4 billion to the treasury, but the treasury used some of the money to buy more shares... d'oh! )

it's not all good news though

The effective purchase price for taxpayers' 43% of Lloyds is 115p per share (or so), compared with a market price that is 41% lower.
So although it's splendid that we as taxpayers are reclaiming £2.3bn, we are still sitting on a £3.5bn loss on our holding of the ordinary shares.

Alan_M_2

That'll be the thousands of small business overdrafts they called in in the last 6 months making up the Billions.....

Taking from Peter to pay Paul.....

Lets have a bit of financial stimulous for business please Gordon rather than pumping it all back into a system thats simply hoarding it all.

1984ReturnsForReal_2

Alan_M wrote: »

That'll be the thousands of small business overdrafts they called in in the last 6 months making up the Billions.....

& its the £995 fees & 5.5% APR they charged to people coming to the end of term for the deals in 2008.

Eyesparky

tomterm8 wrote: »

http://www.bbc.co.uk/blogs/thereporters/robertpeston/



(note, they repay £4 billion to the treasury, but the treasury used some of the money to buy more shares... d'oh! )

Not quite ... the Government are buying £1.7 Billion in shares (to avoid diluting their holding) and underwriting the other £2.3 Billion in-case no one takes up the offer and then Lloyds group will pay it to the Government. As the offer price is so low they will sell the £2.3 Billion in shares to institutions (perhaps some of which the government has stakes in?) but if they did not the government would be paying £4 Billion for shares and receiving £4 Billion back and getting a nice soundbite about £4 Billion being "repaid". Good to see the days of double dealing the finances and misleading the population are over then ...

CLAPTON

Eyesparky wrote: »

Not quite ... the Government are buying £1.7 Billion in shares (to avoid diluting their holding) and underwriting the other £2.3 Billion in-case no one takes up the offer and then Lloyds group will pay it to the Government. As the offer price is so low they will sell the £2.3 Billion in shares to institutions (perhaps some of which the government has stakes in?) but if they did not the government would be paying £4 Billion for shares and receiving £4 Billion back and getting a nice soundbite about £4 Billion being "repaid". Good to see the days of double dealing the finances and misleading the population are over then ...

if you're so confident that the government is double dealing and so have avoided being mislead by the government, then presumably you have massively shorted Lloyds shares so you can be a millionaire on Monday when they fall to 38p
well done!

Generali

Eyesparky wrote: »

Not quite ... the Government are buying £1.7 Billion in shares (to avoid diluting their holding) and underwriting the other £2.3 Billion in-case no one takes up the offer and then Lloyds group will pay it to the Government. As the offer price is so low they will sell the £2.3 Billion in shares to institutions (perhaps some of which the government has stakes in?) but if they did not the government would be paying £4 Billion for shares and receiving £4 Billion back and getting a nice soundbite about £4 Billion being "repaid". Good to see the days of double dealing the finances and misleading the population are over then ...

Any idea how much the Government is charging LloydsTSBHBOSCheltenham&Gloucester&ScottishWidows for the underwriting? My guess is that it rhymes with Rugger All.

chucky

Generali wrote: »

Any idea how much the Government is charging LloydsTSBHBOSCheltenham&Gloucester&ScottishWidows for the underwriting? My guess is that it rhymes with Rugger All.

we can't complain about the banks not paying back their bail outs, when they do start now start complain about fees.

i've no idea about the fee Generali - will try and find out.
the bailout fees weren't cheap in the first place for the banks - maybe they'll get a discount

Generali

chucky wrote: »

we can't complain about the banks not paying back their bail outs, when they do start now start complain about fees.

i've no idea about the fee Generali - will try and find out.
the bailout fees weren't cheap in the first place for the banks - maybe they'll get a discount

Underwriting any kind of fund raising exercise by a bank right now is going to come at a very hefty price. My guess is that the British taxpayer is taking on a risk perceived by the market to be large and thus expensive to 'insure' against.

At some point the politicians are going to try to claim credit for how they've saved the world's economy at minimal expense. Things like this will be very conveniently left out of the reckoning by Governments.

I might be doing a Masters/PhD in a couple of years. The overall cost of the Bailouts could be a good subject to look at.

chucky

very true - and it will probably be Gordon Brown!!

they did say at the time that they would be charging commercial rates.
but as this info hasn't ever really been in the public domain i wouldn't 100% believe that.

at least their paying funds back - good news if their balance sheets are in a good state and removes some stress of government debt levels.
if they're doing it to be be more independent and avoid government interference it's not good news.

tomterm8

Generali wrote: »

Underwriting any kind of fund raising exercise by a bank right now is going to come at a very hefty price. My guess is that the British taxpayer is taking on a risk perceived by the market to be large and thus expensive to 'insure' against.
.

Not sure I really undestand what risk there is of this share issue not being taken up at this stage in the game. The market price is nearly double that of the shares being offered. Surely, unless you really didn't want to make money you'd either sell the rights, or buy the shares?

Generali

tomterm8 wrote: »

Not sure I really undestand what risk there is of this share issue not being taken up at this stage in the game. The market price is nearly double that of the shares being offered. Surely, unless you really didn't want to make money you'd either sell the rights, or buy the shares?

The actual risk isn't as important as the perceived risk and (more importantly) how it is priced. My guess is that Goldmans or someone would want a very hefty fee for this sort of thing, even deeply discounted.