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Osborne to announce sale of government's Lloyds shares

Chancellor George Osborne is preparing to use a keynote speech to the City to signal a sale in shares of taxpayer-backed Lloyds Banking Group, it has emerged.

Mr Osborne will use his Mansion House speech on June 19 to reveal the sell-off of the 39% chunk of the bank owned by the state and worth around £17bn at current prices, according to the Sunday Times.

The sale is likely to take the form of discounted shares to the public, who would be offered the chance to buy stock at a lower price than big investment funds.

Mr Osborne is reported to believe that a privatisation could rekindle the enthusiasm of the 'Tell Sid' advertising campaign which saw millions buy shares in British Gas in the 1980s.

Lloyds was bailed out by taxpayers at the height of the financial crisis but its shares have recovered enough to reach a level at which the Government can break even by selling its stake.

Mr Osborne's announcement will also reportedly indicate plans for the disposal of shares in Royal Bank of Scotland, although this would come after the Lloyds sale – with shares in the 81% state-backed RBS still well below the value at which the Government bought them. The Treasury declined to comment on the report.

But Mr Osborne spoke earlier this year about setting out plans for Lloyds and RBS after the Commission on Banking Standards produces its report. This is due in the next few weeks but, according to speculation, is nearly finalised and may be out in days.

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