A decision to put aside the stake sale is likely to weigh heavy on the government’s finances.
The Treasury had planned to raise £9bn ($11.9bn) through selling its stake in the banks to fund managers and to the public at a discounted price.
But the market volatility triggered by Britons’ vote to leave the European Union has compelled UK policymakers to scrap stake sale plans until 2017, sources close to the Treasury told Reuters.
Prolonged market uncertainty is making it difficult for the finance ministry to decide whether the sale would bring in value for taxpayers.
"It is going to take quite a while for us to understand the implications for the banks before we could even consider starting to sell," one of the sources told the publication.
Though the postponing of asset sales seems to be an appropriate decision for many, it is expected to have serious negative implications on public finances.
The delay in the government’s stake sale in the banks makes taxpayers to face a monthly interest burden of nearly £200m on the debt used to purchase holdings at the peak of the financial crisis in 2008, according to data from the Office for Budget Responsibility.
Currently, the treasury holds 73% stake in RBS and 9% in Lloyds.
Share prices of both banks have dropped sharply in the wake of the Brexit vote that resulted in heavy selling on the stock exchanges.
So far, the British government has been to recover a little over half of the £133bn it shelled out to bail out banks during the global financial crisis.
British Finance Minister George Osborne had planned to sell about £2bn worth shares in Lloyds to private retail investors later this year. He had also planned to offload £5.4bn worth stake in RBS by the end of this year.
Image: RBS Gogarburn building. Photo courtesy of RBS.
