The British government has ditched its plan to divest shares in Lloyds Banking Group (LBG) to private retail investors scheduled in September this year, after its share price tumbled.
Earlier, UK Finance Minister George Osborne had revealed plans to sell a portion of the Treasury’s remaining 25% stake in LBG to private investors before the general election in May 2015.
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However, a 15% drop in the bank’s share price since the start of the year has persuaded Osborne to postpone the planned sale. Its share price decreased by nearly 7% in last two months.
Now, the government will have to wait until at least summer 2015 to commence the public sale of all the remaining government-owned shares, which may be worth £13bn.
In the meantime, the UK Treasury is expected to continue sale of some of the shares it owns in Lloyds to institutional investors, after a £20bn bailout during the 2008 financial crisis.
A Treasury spokesman said: "We want to maximise support for the British economy, get the best value for money for the taxpayer and return the state-owned banks to private ownership.
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By GlobalData"Any decisions on share sales will be determined by value for money and market conditions."
In 2013, the Treasury divested two trenches of Lloyds shares to institutions for approximately £7bn, thus reducing the taxpayer’s stake from 39% to 24.9%.
