Advertisement
UK markets close in 5 hours 41 minutes
  • FTSE 100

    7,959.71
    +27.73 (+0.35%)
     
  • FTSE 250

    19,821.30
    +10.64 (+0.05%)
     
  • AIM

    742.44
    +0.33 (+0.04%)
     
  • GBP/EUR

    1.1690
    +0.0021 (+0.18%)
     
  • GBP/USD

    1.2615
    -0.0023 (-0.18%)
     
  • Bitcoin GBP

    55,975.42
    +502.36 (+0.91%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,248.49
    +44.91 (+0.86%)
     
  • DOW

    39,760.08
    +477.75 (+1.22%)
     
  • CRUDE OIL

    82.11
    +0.76 (+0.93%)
     
  • GOLD FUTURES

    2,229.50
    +16.80 (+0.76%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,503.42
    +26.33 (+0.14%)
     
  • CAC 40

    8,249.46
    +44.65 (+0.54%)
     

Britain's Lloyds to pay first dividend since rescue

(Refiles to remove stray words in seventh paragraph)

* Bank to pay dividend of 0.75 pence per share

* CEO says payout will help government sell shares

* 2014 underlying profit 7.8 bln stg vs 6.2 bln

* CEO handed 11.5 mln pound pay package for 2014

* Labour lawmakers attack pay for top executives

By Matt Scuffham

LONDON, Feb 27 (Reuters) - Lloyds Banking Group is paying its first dividend in more than six years after reporting a rise in profit and improvements in its capital strength, a milestone in the bank's recovery after it was bailed out during the financial crisis.

The bank, which was rescued at a cost of 20 billion pounds ($31 billion) to British taxpayers, said it would pay a dividend of 0.75 pence for the 2014 financial year.

ADVERTISEMENT

Chief Executive Antonio Horta-Osorio said Lloyds, which offered some of the highest dividends in Britain before the crisis of 2007-2009, intended to pay out at least half of its sustainable earnings in the medium term.

Lloyds reported an underlying profit of 7.8 billion pounds, up from 6.2 billion the year before and ahead of market expectations for a profit of 7.5 billion pounds.

The bank said its core Tier 1 ratio, a key measure of its financial strength, rose by 250 basis points to 12.8 percent.

"Today's results are another major milestone in the recovery of the British economy from the great recession and the bank bailouts," said Britain's finance minister George Osborne.

The government will receive a dividend of 130 million pounds. It had already raised nearly 8 billion pounds from the sale of shares in the bank, reducing its stake to below 24 percent.

Horta-Osorio said paying a dividend would help the government sell its remaining shares because the stock would now be bought by dividend-seeking funds. Such investors accounted for over a quarter of Lloyds' shareholder base prior to its bailout.

"We believe that the dividend will be very important in enabling the government to reduce its stake at an even quicker pace," he said.

Lloyds' last payment to shareholders was an 11.4 pence per share dividend for the first half of 2008, paid out in October of that year.

Lloyds is further along the road to recovery than its bailed-out rival Royal Bank of Scotland (LSE: RBS.L - news) , which on Thursday reported a hefty 2014 loss.

RBS's turnaround has been hampered by investigations into past misconduct and a sale of the government's 79 percent stake remains some way off.

CEO PAY PACKAGE CRITICISED

Shares (Frankfurt: DI6.F - news) in the bank rose 0.8 percent to 79.2p by 1620 GMT.

Horta-Osorio has turned Lloyds around since becoming its chief executive in 2011, simplifying the business and slimming down to focus on lending to British households and businesses and meet tougher regulatory rules on capital.

But Labour lawmaker John Mann, who sits on parliament's Treasury Select Committee criticised the bank for handing Horta-Osorio a pay package for 2014 worth 11.5 million pounds.

"It's obscenely high. Why's he getting so much and the taxpayer so little?," Mann told Reuters.

Horta-Osorio also said he would accept shares worth about 7 million pounds awarded under a plan set out in 2012, but would not sell them until the government has sold more shares.

Lloyds said it paid staff 370 million pounds in bonuses for 2014, down 4 percent from 2013. Top managers were handed bonuses worth 30 million pounds.

"People will be rightly taken aback by the huge scale of the bonuses being paid," said Labour lawmaker Cathy Jamieson, the party's spokeswoman for financial affairs.

Meanwhile, the Treasury on Friday apologised for incorrectly stating in a letter that Britain's financial regulator had granted Lloyds permission to buy back bonds issued to strengthen its capital in 2009 at face value. In fact, the regulator has yet to make a decision.

The issue is sensitive because the bonds, which currently trade at a premium to their issue price, are held by thousands of private retail investors. ($1 = 0.6479 pounds) (Additional reporting by Steve Slater; Editing by Sinead Cruise, Keith Weir and Susan Thomas)