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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
(about 1 hour 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 more than 10% below the price at which the government would make a profit from the share sale.The Lloyds share price has dropped more than 10% below the price at which the government would make a profit from the share sale.
We'll build a share owning democracy. So British people can buy Lloyds shares but we'll only sell when turbulent markets have calmed downWe'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.
A Lloyds Banking Group spokesperson 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. “This reflects the hard work undertaken over the last four years to transform the group into a simple, low-risk and customer-focused bank. 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.
“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.”