Osborne to get £178m Lloyds dividend boost: Bank set to resume investor payout

THE Treasury is set to receive a £177.8 million windfall from Lloyds Banking Group, which is poised to resume dividend payments for the first time since the credit crunch.

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The Government's remaining stake could be sold at profit

Aside from providing a windfall to the taxpayer and millions of long-suffering small Lloyds shareholders, bankers say the resumption of dividends would make the shares more appealing to investors, boosting the chances of the Government's remaining 24.9 per cent stake being sold at a profit.

Taxpayer-backed Lloyds is likely to announce that it will restart dividend payments at its annual results on February 27. City analysts forecast that it will pay a dividend of 1p per share, meaning that investors will get a total of £713.7 million from the lender.

Chancellor George Osborne is set to announce what he will do with the Government's share of the dividend windfall in his Budget next month.

Having undergone a clean-up under chief executive Antonio Horta-Osorio, Lloyds feels it is financially robust enough to start paying dividends again after a six-and-a-half year hiatus. It is waiting for final approval from the Bank of England's Prudential Regulatory Authority Arm, which is due this week.

Under Horta-Osorio's watch, Lloyds has returned to profitability and the shares have sailed past the Government's minimum break price of 61.2p a share, closing on Friday at 75.35p.

Despite having to hive off its TSB arm last year, which was a condition of its 2008 bailout, Lloyds is expected to say that its 2014 revenues have been flat at £18.7 billion, while underlying profits are up three per cent to £6.4 billion.

The bank's results come despite the fact that its payment protection insurance mis-selling bill is set to rise by £600 million to stand close to £12 billion, nearly half of the industry total.

Horta-Osorio is reportedly in line to get a £7 million bonus. Details of the bonus will be published in the bank's annual report and accounts, which will be published alongside its full-year results. Although it is likely to provoke controversy, Lloyds will proceed with the bonus as it is part of his long-term incentive plan and reflects the fact that the bank's share price has doubled over the past three years. It is thought that the bonus pool will be significantly lower than last year's £395 million.

Prior to 2008, Lloyds was one of the most widely held shares in the country as it paid one of the best dividends.

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