Many have waited patiently for over a year to buy shares in Lloyds at a 5% discount from the UK government. And I’m here to tell you that the waiting is finally over. Because it ain’t gonna happen. Sorry, but new UK chancellor Phillip Hammond has just announced that he has abandoned the UK treasury’s plans to sell-off its remaining 9% bailout stake at a discount for private investors. Probably because at current levels of 52.6p the shares are rather a long way from the 73p breakeven that predecessor Osborne sensibly said they needed to trade above before the scheme could be launched.

As the shares fell back from 90p last summer to around breakeven this time last year, the deal looked attractive. Since then, however, they have failed to hold above the level to allow the scheme to be triggered, bar a brief window in March. Offering a discount on shares that are already down over 30% is a tough sell to taxpayers seeing as it would merely exacerbate a guaranteed loss and add salt to public bailout wounds. The following statement thus makes sense: “The government wants to get the best possible return for taxpayers. Due to financial market conditions and current share prices, a retail offer at this point in time would not achieve this aim”.

Today’s news has seen Lloyds shares fall below 53p for the first time since early August. They were already down this morning, weighed down by overnight hard Brexit fears that may have led to the flash crash in Sterling that the media has been banging on about today. With Lloyds having the biggest mortgage book in the UK, and a hard Brexit potentially highly toxic for the UK’s cherished housing market, the risk of borrowers falling into negative equity is quite rightly a worry for shareholders. Disappointing UK Halifax house price data doesn’t help this morning either.

Lastly, spreadsheet Phil as he is affectionately known by colleagues, is nonetheless proceeding with selling down the remaining 9% stake gradually over the next 12 months. The aim is still to return the bank to the market wilds via full re-privitisation. This, however, creates an overhang for the shares which is understandably pressuring them as we write.

So there are risks to owning Lloyds shares. But with risk comes reward. Are Brexit fears overdone? Is hardball talk from new PM Theresa May designed to get her European counterparts to give us a better Brexit deal? As we move towards triggering the fabled Article 50 by end-march next year, could we see the UK gain ground on the ultimate Brexit deal? Could this see sentiment towards the UK high street bank  improve and the share price recover? Are they already trading at a 30% discount you can’t afford to ignore? If you think the contrary, is there a short-sell opportunity available with over 13% downside to the referendum lows of 47p.

Whatever you do, the decision is yours. Just don’t waste another year mulling over it!  If you like what you’ve read here, get access to our full research. What’s the risk?

Mike van Dulken, Head of Research, 7 Oct