Retail investors won't get their hands on Lloyds shares until after the election

The government has decided to hold off selling its remaining stake in Lloyds until 2015. Because of, ahem, market volatility.

by Emma Haslett
Last Updated: 14 Aug 2014

Although everyone - bankers, taxpayers, investors, ministers - can agree it's lovely the Treasury has spent the year merrily divesting itself of its stake in Lloyds, what people are less certain on is the success of the various sell-offs.

While the sale of the original tranche of shares sold like hot cakes in September last year, a second sale - at the end of March - didn't go as well, after investors protested the Treasury's decision to sell shares at just 0.5p more than the first time.

It had been expected to sell up another 25% of Lloyds in September, including retail investors for the first time. But the Treasury has now made the executive decision not to offload its entire stake 'before May 2015' because of, ahem, 'market volatility'. Definitely not because another botched sale, especially to retail investors, might look bad so close to an election...

To be fair, as we've seen with recent IPOs, the market is volatile - and engineering a retail offering is always complex. It doesn't help that last month the bank admitted it had set aside another £600m to feed the perpetually hungry cash-eating monster that is PPI compensation.

Shares are now trading at about 73.8p, way below the original offer price of 75p, so the government can always argue that to sell now would not get maximum value for taxpayers. There's also the small matter of market jitters about political instability in Ukraine, Iraq, etc etc, which have combined to push the FTSE 100 down 3.2% in the last three months.

And it's encouraging, of course, that the government has taxpayers' best interests at heart. But potential retail investors may argue it's unfair if the Treasury waits until shares rise too far above IPO price to offer them a chance to buy them, on account of institutions got to buy them at a low price, while the ordinary man on the street will have to fork out more. Poor old George Osborne. It's not easy...

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