View the article online at http://citywire.co.uk/money/article/a876718
Osborne delays Lloyds share sale after market slump
Chancellor George Osborne halts sale of Lloyds shares to public, saying he will sell only when markets 'have calmed down'.
Chancellor George Osborne has delayed the planned sale of shares in Lloyds (LLOY) to the public, saying 'we'll only sell when turbulent markets have calmed down'.
The government had intended to sell £2 billion of shares in Lloyds this spring, as the Treasury offloads its remaining stake in the bank.
But Osborne said he had delayed the sale due to the slump in the markets. 'We'll build a share owning democracy,' he said on Twitter. 'So British people can buy Lloyds shares but we'll only sell when turbulent markets have calmed down.'
With markets having slumped at the turn of the year as fears over China's slowing growth and the tumbling oil price gripped investors, shares in Lloyds, at 63.4p, are well below the 74p price the government paid when bailing out the bank at the height of the financial crisis.
Plans to offer investors a 5% discount on the shares, and a bonus share for every 10 bought, would have left the Treasury even further in the red.
'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,' said Laith Khalaf, senior analyst at Hargreaves Lansdown.
'The government is looking to obtain a good price for the remaining 10% of Lloyds it owns and timing to get the best value around issues such as the Budget, financial and tax year end and Lloyds' own financial calendar was always going to be tricky.'
Russ Mould, investment director at AJ Bell, added: 'Osborne will clearly be looking for a better deal for the government, to maximise returns as best he can, and he 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.'
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by Gavin Lumsden on Oct 26, 2016 at 14:01