Philip Hammond scraps George Osborne's plan to sell off Lloyds bank shares to public

The Chancellor will sell the Government's remaining 9 per cent stake in the bailed-out bank directly into the market

Click to follow
The Independent Online

The Government has scrapped plans to launch its long-anticipated retail sales of shares of the 9 per cent of Lloyds Bank it still owns to British taxpayers.

British taxpayers still hold about £3.6bn shares in Lloyds, after bailing the bank out during the financial crisis.

The Chancellor of the Exchequer Philip Hammond said “ongoing market volatility” means it is not the right time to sell the remaining stake it owns directly to the public –  a plan favoured by his predecessor George Osborne.

Mr Osborne had proposed to press ahead with the share sale to the British public in the spring this year but plans were put on hold because of “turmoil in financial markets”.

Mr Hammond said the Government will now sell the shares through a “trading plan” to investment organisations and pension funds.

This means shares will not be sold as a “retail offer” to the public but instead gradually sold into the institutional investment market to ensure a full return of the bank to the private sector.

The Treasury said it had already raised about £16.9bn from previous sell-offs of Lloyds shares.

“Returning Lloyds to the private sector is in the interests of the bank, taxpayers and the country as a whole,” Mr Hammond said.

“That is why exiting our stake in Lloyds in an orderly way and at the best possible price is one of my top priorities,” he added.

On scrapping the plan to give taxpayers a chance to buy shares directly, Mr Hammond added: “I have listened to the experts. Ongoing market volatility means it is not the right time for a retail offer.”

Antonio Horta-Osorio, chief executive of Lloyds Banking Group, said: “Lloyds Banking Group welcomes the Government’s decision to resume the trading plan to return the bank to full private ownership.”

The decision follows advice from UK Financial Investments (UKFI), a company set up in 2008 to manage the part-nationalised lender independently of ministers, that selling shares through the trading plan represents good value for money for taxpayers.

Lloyds shares fell as much as 4.8 per cent, the biggest fall since July, on the announcement.