Shares in Lloyds soar to three-year high

Shares in UK taxpayer-backed Lloyds Banking Group have reached a three-year high amid mounting speculation that the government is poised to push the button on its stake sale. Reports suggest the Treasury is considering kicking off the sale process within the week, with plans to offload around 5 billion of shares initially — equivalent to around a quarter of its 39 per cent shareholding.

Lloyds shares were trading at their highest level since September 2010, up another 2 per cent at just over 78p after more than doubling in value over the past year. This means shares are comfortably above the 61p minimum level at which the state would break even on its bailout, and higher than the 73.6p average price paid at the time of the bank's £20.3 billion Government rescue. Rumours have been circulating for weeks over Treasury plans to place a 10 per cent stake with institutional investors and shares have held firm despite wider market turbulence due to fears over the Syrian crisis. The Treasury remained tight-lipped on the stake sale, reiterating that it had no timetable for the move. But it is thought Chancellor George Osborne could be keen to capitalise on the stock's recent rises, while an announcement might also be timed ahead of the Conservatives' annual party conference starting on September 29th and before Lloyds enters a close period for its third quarter results on October 29th.

UK Financial Investments, which manages the Government's stakes in Lloyds and Royal Bank of Scotland, is said to be monitoring the bank's shares on a daily basis, although a final decision rests with Mr Osborne.

PA