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Lloyds back in profit and ready for share sale

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The British taxpayer came a little closer to getting some of their money back after Lloyds Bank suggested they were ready to return to private ownership. The bank needed a massive government bailout during the global credit crunch, but recent figures suggest it is over the worst.

Reports for the first half of 2013 showed the bank making a profit of £2.1 billion, compared to a £456 million loss for the same period last year. The profit was even more impressive considering that the bank had to set aside £500 million to cover the cost of mis-selling payment protection insurance.

Lloyds have hardly improved their conduct despite the degree of governmenet ownership. It is currently being investigated by City regulators for its customer dealings at a PPI complaints handling centre. The bottom line is the share price though, and Lloyds share valuation is a penny higher than at the time of the bailout, offering the prospect of a taxpayer profit.

“We did our part. It is up to the government when and how to sell," said chief executive Antonio Horta-Osorio. "I believe we have completed the first phase, the share price is now in a position where the government can return taxpayers' money at a profit." His enthusiasm could be partly explained by the fact that he is in line for a seven-figure bonus if the government sells its shares.

George Osborne might be advised to say not so fast Antonio. If the share price is rising, maybe the Chancellor can hang on for higher returns. It might also serve to delay the day when Lloyds can return to the bad old reckless ways that got it into trouble in the first place. LibDem leader Nick Clegg said there was no rush to return Lloyds to private ownership, even if that was the ultimate intention.

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