George Osborne just put the Lloyds Bank sell-off on ice because of China and oil

The Chancellor is delaying the planned sell-off of Lloyds Bank shares due to market turbulence.

George Osborne pledged last year to sell £2 billion worth of shares in the bank at a 5% discount to the public in one of the biggest privatisations in years. The sell-off was planned to be completed by the spring.

But these plans have been thrown into disarray by the turbulent start to the year for global stock markets. Fears over corporate debt in China and collapsing oil prices have spooked investors, with the US S&P 500 suffering its worst ever start to the year

The FTSE 100 is down 4.5% so far this year, while Lloyds is down 12.5%. Earlier this month the City regulator announced an investigation into a Lloyds trader for alleged manipulation of government debt prices by one of its traders. That could result in a big settlement.

As a result, the Chancellor is postponing the planned Lloyds share sales. Plans to sell-off more of the government’s stake in Royal Bank of Scotland (RBS) are also thought to be in doubt.

George Osborne tweeted on Thursday:
The delay in the sell-off will likely scupper Osborne’s current budget, as the £2 billion raised from the share sale was to be used to pay down the deficit.

Lloyds received £20.5 billion ($31.4 billion) in state handouts between 2008 and 2009 following the credit crisis. In return, the government held a 43% stake in the lender but it has steadily chipped away at its holding since then. It currently holds around 9% of the bank.

Lloyds shares are down 1.5% on Thursday.

NOW WATCH: 5 of the most successful ‘Shark Tank’ stories of all time

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.