£2bn sale of UK bank shares is shelved

Plans dropped owing to economic uncertainty following Brexit referendum result

Plans to start the sale of £2 billion  of retail shares in Lloyds Banking Group over the next six months have been dropped. Photograph: Peter Macdiarmid/Getty Images

Plans to start the sale of £2 billion of retail shares in Lloyds Banking Group over the next six months have been dropped. Photograph: Peter Macdiarmid/Getty Images

 

The sale of billions of pounds of taxpayer-owned shares in bailed-out UK banks has been shelved as a result of stock market turmoil spurred by the vote to leave the EU.

Plans to start the sale of £2 billion (€2.5bn) of retail shares in Lloyds Banking Group over the next six months have been dropped owing to economic uncertainty following the referendum result, according to British government advisers, dealing a blow to UK taxpayers.

Similar attempts to offload the 73 per cent stake in Royal Bank of Scotland as well as £17.5 billion (€2.2bn) of loans issued by defunct lender Bradford & Bingley will also be pushed back, they said.

The turmoil in financial stocks may also cause the Irish government to reassess the planned part-privatisation of AIB, due in the first half of 2017.

Shares in stocks in the banking sector plummeted on Friday on worries about their operations outside the EU. Shares in Lloyds dropped by a fifth, closing at 57p, well below the government’s break-even price of 73.5p.

Financial shares in Dublin lost about 20 per cent of their value on average on Friday, as measured by the ISEQ financial index. Sources say the Government will assess the market conditions in the weeks ahead before deciding what to do. – Copyright The Financial Times Limited 2016