George Osborne today postponed the sale of the last tranche of government-owned shares in the banking giant to the public amid concerns of a fall in Lloyds’ share price.
While the timetable for the share sale has always been vague with Osborne leaning towards the spring of 2016, Laith Khalaf, senior analyst at Hargreaves Lansdown says the Chancellor now looks to be “pinning his hopes on a recovery in markets later in the year”.
He adds the fall in the Lloyds share price has left them around 10p below what the government thinks it would need to break even. And with the planned 5% discount and bonus share scheme, it would mean the government taking a big loss which is a “step too far” for the Chancellor.
Russ Mould, investment director at AJ Bell, said market volatility has left Lloyds’ share price at 63.7p, which is well below the government’s average purchase price of 73.6p.
He 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.”
