Lloyds returns to private sector

The UK government will sell off Lloyds shares worth at least £2bn next spring. This time, members of the public will be able to buy them. They will receive a 5% discount and those seeking shares worth under £1,000 will be prioritised. Investors who keep their shares for a year will get one bonus share for every ten they own (this incentive is capped at £200 per person). Lloyds was bailed out with £20.5bn following the 2008 crisis, when the Treasury took a 43% stake. Sales to institutions have since reduced the state's holding to the 12% now being privatised.

What the commentators said

However, only those who hold on to their shares for a year can benefit from the discount and bonus, "in which time the share price could fluctuate", said Clare Hutchison in The Independent. Investors need to consider whether Lloyds will be able to live up to expectations and pay dividends.

"There are some investors who argue that no bank shares should be touched with a bargepole," said Patrick Hosking at The Times. But Lloyds is at the low-risk end of the spectrum. "It has almost no casino-style investment-banking operations." It concentrates on safer areas, such as savings, mortgages and personal loans, mostly confined to Britain. "So long as Britain prospers, Lloyds will struggle to go badly wrong."

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But it doesn't mean there are no risks. A big recession would affect Lloyds, just like all other banks. Furthermore, competitors, such as peer-to-peer lenders and technology companies, "have so far only nibbled at the big boys' lunch, but that could change".