Sale of Lloyds shares delayed

The shares were expected to go on sale to members of the public in March.

However, the chancellor today (28 January) took to Twitter to confirm the postponement of the sell-off after it was reported by the BBC.

In the Tweet he wrote: “We’ll build a share owning democracy. So British people can buy Lloyds shares but we’ll only sell when turbulent markets have calmed down.”

In October, HM Treasury stated it would sell its remaining £2bn stake in the banking group to retail investors early this year.

It also planned to offer a similar amount to institutional investors, including asset managers.

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.

However, he said taking a big loss on selling shares when markets are low was always going to be “a bridge too far” for the chancellor.

He pointed out the fall in Lloyds share price has left the government around 10p below what it thinks it needs to break even.

“With the planned 5 per cent discount and bonus share scheme it 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 lower market price today means that investors who buy now will get a significant yield pick-up compared to buying at the government’s in-price, Mr Khalaf added.

He described the timetable for the share sale as “vague”, but added the timing was always going to be tricky.

Mr Khalaf said: “Market volatility in recent months has seen UK stock market values fall by around 20 per cent since the April 2015 high, so its understandable that the share sale is being delayed.

“The government is committed to returning the bank to private hands. Therefore we expect this share sale to proceed at some stage, but the timescales are unknown.”

katherine.denham@ft.com