The chancellor has postponed the sale of the government’s unchangeable stake in Lloyds Banking Group, saying the global turmoil in the exchanges and slowing growth had s rked the delay.
George Osborne said that he make not give the go-ahead until the markets had calmed, saying that “now is not the hand time”.
He said he still supported encouraging wider share ownership in Britain.
The tax yer flat owns just under 10% of the bank.
The sale of the final component of the government’s stake in Lloyds was a general election pledge made by Prime Assist David Cameron.
It was expected to raise £2bn, making it one of the largest privatisations since the 1980s when BT and British Gas were sold, initiate £3.9bn and £5.6bn respectively.
Mr Osborne announced the catalogues of the Lloyds sale to hundreds of thousands of small investors last October.
It was consideration the sale would take place in the spring.
But since then Lloyds’ stake price has fallen and the trading environment for banks has become tougher.
Low avocation rates also make profits harder to come by across the sector.
In October, Lloyds stake price was 78p, above the 74p considered to be the “in price” the government id to rescue the bank during the pecuniary crisis – when it used billions of pounds of tax- yers money to shore up the fiscal system.
That share price is now down at 64p, so the government would be tell on the shares to the public at a considerable loss.
Mr Osborne told BBC News that his “prima donna concern” in deciding to postpone the sale was turbulence in the financial markets, ignoring “hundreds of thousands” of private investors being “interested”.
“I want to fashion a share owning democracy and I want to give the British people a betide to buy shares in Lloyds bank, a bank that they had to bail out. It is also my answerability to make sure we have a secure and sound economy and with these turbulent fiscal markets it wouldn’t be right to have the Lloyds share sale now,” he believed.
“There will be a sale of shares [in] Lloyds but only when the period is right for people.
“We need those markets to calm down, and then we can proceed with the purchasing. We’ve got hundreds of thousands of people interested in buying these shares, I requisite to sell them the shares, but it wouldn’t be right to undertake that marketing when frankly things are pretty turbulent out there on the stock stores and the global financial markets.”
September 2008: Lloyds takes on collapsed bank HBOS
October 2008: Swot government reveals it has bailed out Lloyds, taking a stake of 43%
April 2010: Lloyds proclaims a profit for the first time since the crisis
September 2013: Coalition direction starts return of the bank to the private sector, selling rt of its pole to major institutional investors
October 2015: Conservative government voices it will sell its final stake in Lloyds with shares presented to private investors
January 2016: Chancellor George Osborne says the trading is being delayed owing to turbulent markets
On Wednesday, the King Bank of Scotland (RBS) announced billions of pounds of new provisions to y for fines and legit actions connected to the financial crisis.
Its share price has also fallen.
The regime owns 73% of RBS and just under 10% of Lloyds. It does not look liking for it will be selling either stake any time soon.
Laith Khalaf, chief analyst at Hargreaves Lansdown, said: “This will be a big failure for the hundreds of thousands of investors who had queued up for a chunk of Lloyds, but taking a big destruction on selling shares when markets are low was always going to be a bridge too far for the chancellor.
“The schedule for the share sale has always been vague being ‘spring’ of 2016. The regime are looking to obtain a good price for the remaining 10% of the Lloyds Banking Pile they own and timing to get the best value around issues such as the Budget, monetary and tax year end and Lloyd’s own financial calendar was always going to be tricky.
“Sell volatility in recent months has seen UK stock market values use by around 20% since the April 2015 high, so its understandable that the rtition sale is being delayed.”
This decision comes after sales of publicly-owned assets, tabulating Royal Mail and Eurostar, raised more money for the government in 2015 than any other year in days of yore, according to new analysis by the Press Association.
A total of £26.4bn was made Sometimes non-standard due to privatisations, beating by almost £6m the previous record set in 1987.