Senior Conservatives are understood to be considering a proposal from a right-wing think tank over the sale of Royal Bank of Scotland and Lloyds shares to the public.
The proposal, which is set to be revealed in a paper from Policy Exchange, would be the biggest share sell-off in history, outstripping the utilities share sales of the 1980s with 40 to 45 million able to buy a stake in the part-nationalised banks.
Tories privately believe that the move could be a way of winning over voters ahead of the 2015 general election.
The report is by James Barty, a former head of equity strategy at Deutsche Bank, who is expected to conclude a “Tell Sid”-style privatisation would be the most effective way for the state to shed its shares in the banks.
RBS is 82 per cent owned by the taxpayer, while the government holds 39 per cent of Lloyds shares largely from its takeover of the failed Halifax Bank of Scotland.
But last night the Treasury played down suggestions the proposal will be accepted by Chancellor George Osborne.
A source close to the Chancellor dismissed reports as “just speculation”.
A spokesman for the Chancellor’s office said: “Our position remains the same. We’ll dispose of these assets in the interest of the taxpayer at the right time.”