Lloyds share price: Government shelves retail sale after referendum result
The government has shelved plans to sell shares in Lloyds Banking Group (LON:LLOY) and bailed-out peer Royal Bank of Scotland Group (LON:RBS), the Financial Times has reported. The move came after the UK voted to leave the European Union in last week’s referendum, with the decision resulting in stock market turmoil.
Lloyds’ share price, which plunged by a fifth in the previous session, has continued to slide this morning, having shed 3.16 percent to 55.20p as of 08:05 BST, underperforming the benchmark FTSE 100 index which currently stands 0.77 percent in the red at 6,091.15 points. The shares have fallen well below the government’s break-even price of 73.6p.
The FT quoted government advisers as saying over the weekend that plans to start the sale of £2 billion of retail shares in Lloyds over the next six months had been dropped owing to economic uncertainty following the referendum result. Plans to offload shares in RBS have also been put on hold.
“All the work to repair share prices has been undone in one day. Any major share sale is a non-starter with this uncertainty,” Mark Garnier, a Conservative MP who sits on the Treasury committee, told the newspaper. “Plus we have political uncertainty with the leadership changes.”
Chancellor of the Exchequer George Osborne had planned a ‘Tell Sid’-style sale of £2 billion Lloyds shares, which was expected later this year had the UK voted to remain part of the EU. The FT quoted a spokesman for the FTSE 100 bank as saying that “this was a matter for government”.
Analysts, however, remain bullish on Lloyds in the wake of the referendum. Deutsche Bank reiterated its ‘buy’ stance on the company yesterday, without specifying a price target. Jefferies also continues to see the stock as a ‘buy,’ valuing the shares at 68p.
As of 08:41 BST, Monday, 27 June, Lloyds Banking Group share price is 72.15p.