Osborne rules out pre-election Lloyds shares sale

13th Aug 2014 11:31

Chancellor George Osborne will rule out a pre-election sale of Lloyds Banking Group shares to the general public, Sky News said on Wednesday.Osborne's decision goes against initial reports that had expected the government would make part of its remaining stake in the bank available to investors as soon as September.According to Sky, the Treasury has decided against offloading part of its remaining shares over the next couple of months, as the volatility of the stock market and the time required to carry out a public share would create an unacceptable risk for the government.Next month's Scottish independence referendum, new guidelines from the Bank of England and doubts over the timing of Lloyds' resumption of dividend payments were also cited as contributing factors to the Treasury's decision.In its half-year report released last week, Lloyds warned of potential risks arising from a 'Yes' vote in the Scottish referendum.Making government-owned shares available to the public would also be an extremely time-consuming process as far as gathering all the documentation needed to process such a transaction is concerned, which means a retail offering wouldn't be available until early 2015.However, with the general election scheduled for 5 May, a public share sale could backfire onto the Chancellor, who could be accused of using a state-owned asset to serve a political agenda, Sky says.The government has made £7bn by selling part of its Lloyds stock over the last 12 months, bringing its stake down from 40% to 25%, with the current holding managed by UK Financial Investments (UKFI), which, Sky suggests, has been involved in preparations for a public offering.Lloyds was fined almost £220m for manipulating LIBOR, the interbank borrowing rate, and recently saw its bill for mis-sold payment protection insurance past the £10bn mark.Lloyds shares were down 6.01% to 117.2p at 11:56 on Wednesday.DC