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| George Osborne postpones sale of last publicly owned Lloyds Bank shares | George Osborne postpones sale of last publicly owned Lloyds Bank shares |
| (35 minutes later) | |
| George Osborne has postponed the sale of the last taxpayer-owned tranche of Lloyds Banking Group shares this spring, blaming “market turbulence”. | George Osborne has postponed the sale of the last taxpayer-owned tranche of Lloyds Banking Group shares this spring, blaming “market turbulence”. |
| The chancellor pledged in last year’s election manifesto to sell the remaining stake in the bank – just under 10% of the company – to the public this spring. | The chancellor pledged in last year’s election manifesto to sell the remaining stake in the bank – just under 10% of the company – to the public this spring. |
| However, he decided to delay the sale following the sharp sell-off in stock markets in recent weeks. The sale will not happen until after Easter, it is understood. | However, he decided to delay the sale following the sharp sell-off in stock markets in recent weeks. The sale will not happen until after Easter, it is understood. |
| Osborne said: “I want to create a share-owning democracy. It’s also my responsibility to ensure economic responsibility, so with these turbulent financial markets now is not the right time to have that sale. | Osborne said: “I want to create a share-owning democracy. It’s also my responsibility to ensure economic responsibility, so with these turbulent financial markets now is not the right time to have that sale. |
| “We will sell Lloyds to the British people, but we will do so when the time is right.” | “We will sell Lloyds to the British people, but we will do so when the time is right.” |
| Several indices, including London’s leading share index, entered bear market territory earlier this month. There was panic selling as crude oil prices slumped to fresh 13-year lows and investors fretted about China’s economic slowdown and the state of the global economy. The FTSE 100 index has recovered this week and hit a three-year week of 6012.4 on Thursday before falling back again, and global equity markets remain volatile. | Several indices, including London’s leading share index, entered bear market territory earlier this month. There was panic selling as crude oil prices slumped to fresh 13-year lows and investors fretted about China’s economic slowdown and the state of the global economy. The FTSE 100 index has recovered this week and hit a three-year week of 6012.4 on Thursday before falling back again, and global equity markets remain volatile. |
| The Lloyds share price has dropped below 64p, well below the government’s average purchase price of 73.6p, above which it would make a profit. In October, when Osborne set out details of the Lloyds sale, the shares were trading at nearly 78p. | |
| The cut-price sale, to hundreds of thousands of retail investors, was expected to raise £2bn and billed as the “biggest privatisation for 20 years”. In the 1980s, BT and British Gas were sold for nearly £4bn and £5.6bn. | |
| We'll build a share owning democracy. So British people can buy Lloyds shares but we'll only sell when turbulent markets have calmed down | We'll build a share owning democracy. So British people can buy Lloyds shares but we'll only sell when turbulent markets have calmed down |
| Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “This will be a big disappointment for the hundreds of thousands of investors who had queued up for a chunk of Lloyds, but taking a big loss on selling shares when markets are low was always going to be a bridge too far for the chancellor. | Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “This will be a big disappointment for the hundreds of thousands of investors who had queued up for a chunk of Lloyds, but taking a big loss on selling shares when markets are low was always going to be a bridge too far for the chancellor. |
| “The fall in the Lloyds share price has left them around 10p below what the government thinks it needs to break even, and together with the planned 5% discount and bonus share scheme would have meant the chancellor putting his hand in his pocket, so now he looks to be pinning his hopes on a recovery in markets later in the year.” | “The fall in the Lloyds share price has left them around 10p below what the government thinks it needs to break even, and together with the planned 5% discount and bonus share scheme would have meant the chancellor putting his hand in his pocket, so now he looks to be pinning his hopes on a recovery in markets later in the year.” |
| It is yet another U-turn on a manifesto pledge, following Osborne’s change of heart over tax credit cuts in the autumn statement. | It is yet another U-turn on a manifesto pledge, following Osborne’s change of heart over tax credit cuts in the autumn statement. |
| Lloyds Banking Group noted that the government had progressively reduced its stake in the group from 43% to just 9%, returning over £16bn to taxpayers at a profit. | Lloyds Banking Group noted that the government had progressively reduced its stake in the group from 43% to just 9%, returning over £16bn to taxpayers at a profit. |
| A spokesman said: “This reflects the hard work undertaken over the last four years to transform the group into a simple, low-risk and customer-focused bank. | A spokesman said: “This reflects the hard work undertaken over the last four years to transform the group into a simple, low-risk and customer-focused bank. |
| “The timing of any future retail sale is a matter for the government. Our focus is on moving the group forward so that it can continue to be profitable and deliver sustainable returns to all our shareholders.” | “The timing of any future retail sale is a matter for the government. Our focus is on moving the group forward so that it can continue to be profitable and deliver sustainable returns to all our shareholders.” |
| Russ Mould, investment director at online investment firm AJ Bell, said the chancellor “won’t want any issue that was aiming for substantial involvement from private investors to be a flop. That would damage already fragile sentiment and make it harder for any future privatisations to do well.” | |
| He added: “Investors will also note that it is not just Lloyds’ share price that is struggling – all banks are floundering. Bank sector indices in the UK, Europe and USA are all trading at their 12-month lows.” |