Shares in taxpayer-backed Lloyds Banking Group soared to a five-year high yesterday amid speculation the government is poised to start selling its stake.
A source close to the situation said it was ‘entirely possible' that the share sale could begin this month - and possibly within the next seven to ten days, the Daily Mail reports.
It is thought George Osborne is keen to start offloading the government's 39% stake before the Conservative's party conference begins on 29 September.
Lloyds shares jumped 1.22p to 78p - a closing price not seen since late 2008 when the global banking system was reeling following the collapse of Lehman Brothers.
The government is understood to be considering the sale of around a quarter of its holding - worth about £5bn - if it can get more than the 73.6p a share it paid in the £20.3bn bailout in 2009.
UK Financial Investments, which manages the government's stakes in Lloyds and Royal Bank of Scotland, is reviewing the situation daily and will make a recommendation to the Treasury over when to commence the sale.
The final decision will be taken by the Chancellor who will be want to capitalise on the rising share price at a time when the economy looks to have turned a corner. The state also owns more than 80% of RBS following its £45.5bn bailout but the sale of those shares is unlikely anytime soon.
The government has launched a review into splitting up RBS into a ‘good bank' to lend to households and businesses and a ‘bad bank' full of toxic assets.
Lloyds this week spun off 631 branches under the TSB brand to appease European rules on state aid following its bailout at the height of the financial crisis.
The launch was blighted by an IT glitch that left some of its customers unable to access accounts online.
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