The government has pulled out of plans to sell shares in
While the public will have to wait until at least summer 2015 for the chance to buy shares in Lloyds, the Treasury is likely to continue selling chunks of the bank to institutional investors.
Sources in the Treasury said selling shares to the public now would be too risky given market volatility and geopolitical uncertainty. There are also concerns about the 6% drop in the Lloyds share price since June.
The government is keen to ensure it achieves a good price for the taxpayer following accusations that it sold
A spokesman for the Treasury said: "The chancellor set out the government's approach to the state-owned banks in his Mansion House speech last year: we want to maximise support for the British economy, get the best value for money for the taxpayer and return the state-owned banks to private ownership. Any decisions on share sales will be determined by value for money and market conditions."
There are only brief windows of opportunity to launch the public offer. The sale process could not start before the Scottish independence referendum next month, and would not be permitted in the run up to Lloyds' annual result in February or the budget in March. By that time there would be just three months until the general election.
The government has already sold two chunks of Lloyds shares to institutions, making about pounds 7bn and reducing the taxpayer's stake to 24.9%.
A public sale of all the remaining government-owned shares, worth pounds 13bn at yesterday's closing price of 73.7p, would be the biggest privatisation in decades.
If the shares are sold at that price the government will just about break even on its investment - having bought up pounds 20bn of Lloyds shares at an average price of 73.6p in 2008.
Last month Lloyds reported a 33% fall in first-half profits to pounds 863m as its bill for the payment protection insurance scandal increased by pounds 600m and it paid out penalties for rigging interest rates.
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