The government had initially planned to offer Lloyds shares to retail investors this spring.
Shares have been sold through the trading plan for an average price of over 81p, compared to the average 73.6p originally paid for the shares. However share prices are now down to 64p.
Speaking on Twitter today, Osborne said:
"We'll build a share owning democracy. So British people can buy Lloyds shares but we'll only sell when turbulent markets have calmed down."
The government's trading plan has recovered over £9 billion so far, and reduced the government’s remaining stake in Lloyds to around 9%.
Laith Khalaf, Senior Analyst at Hargreaves Lansdown, commented:
"This will be a big disappointment for the hundreds of thousands of investors who had queued up for a chunk of Lloyds, but taking a big loss on selling shares when markets are low was always going to be a bridge too far for the Chancellor.
"The fall in the Lloyds share price has left them around 10p below what the government thinks it needs to break even, and together with the planned 5% discount and bonus share scheme would have meant the Chancellor putting his hand in his pocket, so now he looks to be pinning his hopes on a recovery in markets later in the year.
"The timetable for the share sale has always been vague being “spring” of 2016. The government are looking to obtain a good price for the remaining 10% of the Lloyds Banking Group they own and timing to get the best value around issues such as the Budget, financial and tax year end and Lloyd’s own financial calendar was always going to be tricky. Market volatility in recent months has seen UK stock market values fall by around 20% since the April 2015 high, so its understandable that the share sale is being delayed.
"The government are committed to returning the Bank to private hands and within that had previously pledged to offer at least £2 billion as a retail offering. Therefore we expect this share sale to proceed at some stage but the timescales are unknown."
