George Osborne pulls proposed sale of Lloyds stake

UK chancellor George Osborne has postponed the sale of his government's final stake in Lloyds Banking Group, blaming turbulence in the global markets.

The chancellor said he would wait until volatility in the markets had “calmed down”, before pressing ahead with sale of the UK government’s near 10 per cent stake in the high street lender.

The government’s last tranche of shares in Lloyds was slated to go on sale in the spring, but it is now thought it will be halted until after Easter.

The announcement comes amid continued chaos in the global markets, which have seen top-flight shares in London fall by some 7 per cent since the start of the year and a sharp drop in commodity prices.

However, Mr Osborne insisted he would still sell the Lloyds shares, but would wait until the time was right.

He added: “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.”

Financial crisis

The government bought Lloyds shares for 74p (97c) when it used taxpayers’ money to bail out the lender as it looked to bring stability to the banking industry at the height of the financial crisis.

David Cameron pledged during the general election to sell the final part of the Government's stake, which was expected to raise £2 billion.

Details of the sale — set be one of the biggest privatisations since British Gas and BT in the 1980s — were announced last October.

However, the Lloyds share price has fallen from 78p to 64p since then, meaning any efforts to press ahead with a sale would have seen shares sold at a substantial loss.

A Downing Street spokesman said it had taken into account the market conditions and it was important that any Lloyds share sale “delivered value for money”.

The UK government has already returned £16 billion to taxpayers by driving down its stake in the lender from 43 per cent to just under 10 per cent.

Lloyds took over HBOS in 2008, thus taking control of Bank of Scotland (Ireland). The Irish business has since been wound down.

PA