The Treasury is actively considering options to return partially state-owned Lloyds bank to the private sector, the Chancellor has announced.
George Osborne offered no timetable for share sales but said "investor interest is growing".
He also said that the sale of the Government's stake in RBS remains "some way off".
ITV News' Business Editor Laura Kuenssberg reports.
The outgoing Governor of the Bank of England has welcomed the Chancellor's announcement that steps are being considered to return part state-owned Lloyds bank to the private sector.
Speaking at Lord Mayor's banquet, Sir Mervyn King said: "Britain needs a thriving banking system to serve households and businesses and Lloyds and RBS will be able to play that role to the full only when they are back in the private sector".
Addressing George Osborne, he said: "I welcome your announcement that Lloyds Banking Group will be returned to private hands soon and I very much support your plans for a full review of the future structure of RBS".
Responding to the Chancellor's Mansion House speech, shadow chancellor Ed Balls said:
We have always argued that the future of RBS and Lloyds should be driven by the best interests of the British taxpayer and the wider economy, not a political timetable.
George Osborne has now been forced to back down from the foolhardy idea of a pre-election firesale of RBS. This would have meant a loss of billions of pounds to the taxpayer at the current share price.
The Government's review of the future shape of RBS is welcome but it must look at all the options, including the case for splitting retail and investment banking at RBS, so that there is no return to business as usual.
On Lloyds, we are clear that the taxpayer needs to get its money back but following the collapse of branch sales to the Co-op Bank it's vital that we have a new strategy from the Government to boost competition on the high street.
- The Government bought 39% of Lloyds shares and 81% of RBS in a multi-million pound bailout at the height of the financial crisis in 2008
- The Government believes a sale price of 61.2p would allow it to recoup the #20 billion it ploughed into the bank.
- Shares today closed down 0.42p at 61.76p.
The Chancellor George Osborne said Britain had "left intensive care" and was now "moving from rescue to recovery."
The situation in the Eurozone remains fragile. Some of the data from theemerging economies has underwhelmed. And Britain remains encumbered by debtsbuilt up over many years.
The British economy is healing. We are moving from rescue to recovery. But while Britain has left intensive care, we still need to secure the recovery – and make sure we continue to treat the ailments that brought us low in the first place. Full recovery won’t be easy but I won’t let up in my determination to put right what went so badly wrong.
Nothing better signals Britain's move from rescue to recovery than the fact that we can start to plan for our exit from Government share ownership of our biggest banks.
The Chancellor George Osborne has said that the sale of the Government's stake in the Royal Bank of Scotland remains "some way off." Speaking during his annual Mansion House address, he said:
I don’t want a quick sale of our RBS shares. I want the right sale – the right sale for the British people.
I will only sell our stake in RBS when we feel the bank is fully able to support our economy and when we get good value for you, the taxpayer.
In our judgment, when it comes to RBS that moment is some way off.
This is what the Chancellor said about splitting up RBS in February.
– Chancellor George Osborne, speaking in February
You have to weigh the merits of that approach - including the upfront cost, the complexity of separating the bank, the fact that you would be left with the bad bank on your books for ever until it had run off, and then you'd have your new bank and you'd privatise it - you'd at least have to weigh against the current strategy, he said. I think the obstacles to your approach are very considerable.
Chancellor George Osborne has announced that the Government is taking the first steps to return Lloyds to the private sector and now actively considering options for share sales.
Speaking during his annual Mansion House address, he said:
Lloyds is in a good position. Investor interest is growing. And shares are already trading at around the price where selling would reduce the national debt.
I can announce that we are actively considering options for share sales in Lloyds.
Of course, we will only proceed if we get value for the taxpayer. And we have no pre-fixed timescale or method of disposal.
Outgoing Bank of England governor Sir Mervyn King is being made a peer. Prime Minister David Cameron nominated the banking chief for a life peerage for his significant contribution to public service. The announcement comes as Sir Mervyn gives his final Mansion House speech tonight.
In his annual Mansion House address, Chancellor George Osborne will outline the next stage of the Government’s plan for the recovery of the UK's banking system.
As part of this, he will set out the following three key objectives for partly-state owned banks:
- 1. Maximize their ability to support the British economy.
- 2. Get the best value for money for the taxpayer.
- 3. Do what we can to return them to private ownership.
Mr Osborne will say: “Nothing better signals Britain’s move from rescue to recovery than the fact that we can start to plan for our exit from government share ownership of our biggest banks".