Lloyds and Royal Bank of Scotland takes beating during plunge in stock market; Government seeks privatization

As the onslaught of the stock market tumult continues to wreak havoc on some of Britain's banks, Lloyds and Royal Bank of Scotland lost almost £3 billion from their value.

This is a major delay to the plans of Chancellor George Osborne to re-privatize RBS as soon as possible, as shares dropped by 5 percent to 308.1p. This indicates shares going down almost 8 percent, or 26p, since the government sold a 5.4 percent stake in the Royal Bank of Scotland at 330p per share.

The decision to tell RBS shares made taxpayers lose £1billion as they paid around 500p per share in the £45.5 billion rescues of RBS in 2008. The government still owns almost a third of the High Street Giant. The government explained that the sell would whet the appetite for investors and increase the share price for future sales.

Osborne also wants Lloyds Bank to be privatized by the end of the year, after announcing that the government has decreased holding in the lender to lower than 13 percent. He doesn't want the government to be involved in UK's banking system. He tweeted, "Delighted that we continue to get taxpayers' money back through Lloyds share sales, taking total now to £14.5 billion."

Government resolved to sell Lloyds shares amid market rout. This is a very volatile trading on the FTSE 100 since it rescued Lloyd Banking Group back in 2008. The Treasury got rid of another 1% in the high street bank for the institutional investors.

The re-privatization of Lloyds was delayed when shares dropped below 73.6p, closing down 3 percent at 73.46p.

Osborne hopes to finish the sale of the lender within a year, after starting to re-privatize the bank in 2013. The selling of shares started in December of 2014. The government raised 14.5 billion after reducing its stake in the Lloyds bank to 13 percent from 43 percent.