Lloyds shares at three-year high amid sale talk

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SHARES in Lloyds Banking Group hit a three-year high yesterday amid mounting speculation that ministers are close to announcing a stake sale.

Sources suggested the Treasury was considering kicking off the sale process within the week, with plans to off-load about £5 billion of shares initially – equivalent to a quarter of its 39 per cent shareholding.

Shares in the bank, which have more than doubled in value over the past 12 months, closed at 78p, up 1.22p or 1.6 per cent, having hit a session high of 78.7p. This means shares are comfortably above the 61p minimum level at which the state would break even on its bailout of Lloyds and higher than the 73.6p average price paid at the time of the bank’s £20.3bn 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. One senior UK equities fund manager specialising in financial stocks said: “From the level of noise, it’s imminent.”

The Treasury remained tight-lipped, reiterating that it had no timetable for the move. But it is thought Chancellor George Osborne could be keen to capitalise on the recent rises, while an announcement might also be timed ahead of the Conservative party’s annual party conference starting on 29 September. UK Financial Investments, which manages the taxpayers’ stakes in Lloyds and RBS, is said to be monitoring the shares on a daily basis, although a final decision rests with the Chancellor.