Lloyds share price falls as Chancellor delays retail sale

on Jan 28, 2016
Updated: Oct 21, 2019

Chancellor of the Exchequer George Osborne has delayed the sale of the government’s final chunk of shares in Lloyds Banking Group (LON:LLOY), blaming the move on the market volatility seen in the past few months. The Chancellor had promised to offer about £2 billion of the government’s holding in the bailed-out lender to retail investors at a discount. It was thought that the sale would take place this spring.

Lloyds’ share price has fallen deep into the red following the news, having shed 2.50 percent to 63.30p as of 12:13 GMT. The shares have lost 13.18 percent of their value in the year-to-date and trade well below the taxpayer’s break-even price of 73.6p.
The Chancellor told Sky News today that he had decided to delay Lloyds’ share sale due to the sharp falls in markets in recent months.
“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 told the newswire. Separately, the Chancellor tweeted that “British people can buy Lloyds shares but we’ll only sell them when turbulent markets have calmed down”.

His comments come after he announced the details of the upcoming Lloyds sale in October, promising to offer shares to private investors at a five-percent discount. Since then, however, Lloyds’ share price has fallen well below the 73.6p break-even price, as part of broader market turmoil which saw the benchmark FTSE 100 index slip into bear market territory earlier this month. The fall in the bank’s stock means that the government would be selling the shares to the public at a considerable loss.
“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, as quoted by the BBC. “Market volatility in recent months has seen UK stock market values fall by around 20% since the April 2015 high, so it’s understandable that the share sale is being delayed.”
As of 12:35 GMT, Thursday, 28 January, Lloyds Banking Group share price is 63.31p.