Lionel Laurent is a Bloomberg Gadfly columnist covering finance and markets. He previously worked at Reuters and Forbes.

The U.K. government is no longer the largest shareholder of Lloyds Banking Group Plc, the recipient of a 20 billion-pound ($24 billion) bailout at the height of the financial crisis.

That's good news for the British taxpayer, which wants its money back, and for the bank, which wants independence. But it's only an incremental step in a very long goodbye, rather than a quickie divorce. There are a few more milestones to go before victory can be declared.

Slow Going
Lloyds' share price has yet to return to pre-Brexit vote levels, scuppering plans for a big privatization
Source: Bloomberg

Rather than exiting Lloyds in a hail of confetti and a big privatization, Her Majesty's Government has been selling its remaining 9 percent stake in dribs and drabs since October.

Blame Brexit: Lloyds' share price is still below its level before the vote to leave the European Union as well as the government's 73.6 pence break-even price. Selling small slivers back to the market has been the best way to limit taxpayer losses. The government's stake is now just below 6 percent, ranking it the No. 2 shareholder behind BlackRock Inc. At this rate, a full exit from Lloyds still looks half a year away.

Until that point, it's hard to see what really changes for Lloyds. The bank's share price hasn't been dented by the overhang of government stock. The stock has gained 24 percent in the past three months, better than the European sector's 22 percent rise. That's thanks to the U.K. economy's better-than-expected performance and bets on a positive pick-up in rates. The impact of Brexit on future dividend payouts is the big question for investors, not the pace at which the government sells its shares. 

Lloyds Rebounds
The U.K. bank's share price has shrugged off Brexit as well as the government's trickle of stock sales
Source: Bloomberg

Operationally and strategically, too, Lloyds already looks to be in tune with private shareholders' interests. Its price-to-book ratio is the tenth-highest in its European peer group and the highest among U.K. peers, according to Bloomberg Intelligence.

Government Premium
Lloyds trades at a higher price-to-book ratio than U.K. peers
Source: Bloomberg

CEO Antonio Horta-Osorio's focus on consumer banking, cost cuts and defending market share is what investors seem to want over racy investment-banking operations.

Equally, the government shareholding hasn't stopped Lloyds from resuming dividends and making acquisitions, including the 1.9 billion-pound takeover of U.K. credit-card business MBNA.

One thing that could change with full independence, though, is Horta-Osorio's compensation: he has agreed not to sell some of the 22 million pounds of Lloyds shares he had been given as part of a bonus plan until that point.

Ultimately, it's the upcoming hurdle of Brexit that looks more material for Lloyds than any government sale. The process of leaving the EU is due to be officially triggered by the end of March, meaning there could be more pressure in store for the country's No. 1 mortgage lender.

A big knock to Lloyds shares might throw a wrench in the works of the government's plans; on the other hand, moving quickly to dump shares before April risks missing out on future gains if the impact is not as bad as feared.

Today's news may be a milestone -- but journey's end looks a way off.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Lionel Laurent in London at

To contact the editor responsible for this story:
Edward Evans at