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The chief executive of Lloyds Banking Group has called on the UK government and regulators to do more to repair the country’s international credibility, after the damage caused by a period of chaos during the mini-budget last year and actions by regulators during the pandemic.
Speaking at the FT Global Banking Summit on Tuesday, Charlie Nunn blamed the persistent underperformance of UK bank shares on the lingering damage to the UK economy caused by the former prime minister Liz Truss’ radical policies.
“We just want a level playing field relative to other international markets,” he said. “Many corporations are looking at investment cases [elsewhere] and putting their money in other markets.”
He called on the government to do more in relation to public investment plans to finance the green transition, as the US and Europe have ramped up incentive schemes.
Nunn also said international investors remained wary of investing in UK banks because they fear politicians may introduce windfall taxes on bank profits similar to those seen in Spain and the Netherlands. The ban imposed by the Bank of England on banks paying dividends during the pandemic also weighed on investor sentiment, he added.
Last year, the Lloyds boss warned of “nervousness” and “concerns about the UK as an investment thesis”. On Tuesday, he said that despite a recovery in economic growth since the Covid-19 pandemic, international investors still had “questions” about the UK’s productivity, persistently high inflation and the value of its currency.
Nunn said that he hoped a new strategy unveiled by the bank last year, combined with a commitment to return more capital to shareholders through buybacks and dividends, would boost the bank’s share price.
Lloyds has sought to diversify its income away from lending and retail banking since Nunn took over as chief executive from António Horta-Osório in 2021. Its strategy also involves a push towards digital services, with more than 2,500 jobs at risk as part of a strategic review.
Lloyds’ shares have fallen about 10 per cent this year and trade at a discount to the book value of its assets.
“We need to get the confidence that we can grow in this economy in that way if we can help investors re-rate the stock,” he said.
Nunn said the bank had no plan to go back into investment banking and reiterated that it was on course to achieve its target of adding £1.5bn to revenues by 2026.
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