CHANCELLOR George Osborne has decided to postpone the sale of the government’s final stake in Lloyds Banking Group, after admitting that the global turmoil in stock markets and slowing growth was the reason for the delay.
With an expected ‘windfall’ of £2 billion (€2.6 billion), this was to be a useful addition to the government’s finances, as well as confirmation that the banking sector had returned to normal, and the sale was part of the conservative party manifesto at the last election.
There was some serious criticism of the sale of the first tranche of Lloyds shares in October last year, when the government was accused of pitching the price to corporate investors too low, but since that time, the price of its shares has fallen and banks are not performing as well as expected.
Prices then were in the region of 78p per share, which seemed to show a profit for the government which had invested large amounts to support the bank, but they are currently trading around 65p, so there could be a considerable loss if the government allowed the sale to go ahead.
If that wasn’t bad enough, the government’s other bank, the Royal Bank of Scotland, has had to make huge provisions to cover fines and expected legal actions.