Speculation about a government sell-off of Royal Bank of Scotland and Lloyds Banking Group was escalating on Tuesday night amid reports that the International Monetary Fund is urging the Treasury to accelerate its disposal of the £65bn stakes in the two bailed-out banks.
As part of its annual health check on the UK economy, the Washington-based fund is said to be telling the government that disposal of the share stakes should be a priority.
Hopes of a sell-off of the 39% stake in Lloyds and 81% stake in RBS have risen in recent days as their share prices have climbed. On Tuesday shares in Lloyds closed just above 61p, the level which the Treasury has signalled it now regards as break-even for the taxpayer, while RBS was at 342p, still below any break-even targets set by the government.
The City has been focusing on 61p as a potential price at which to sell off Lloyds since March, when the bonus for the bank's chief executive, António Horta-Osório, was linked to selling off a third of the taxpayers' stake above this price. It is lower than the targets the City had originally been expecting of 73p, and the chancellor is yet to make public pronouncements on his intentions to sell off stakes in any banks.
He has made clear that he does not want to plough in more taxpayer funds to fully nationalise RBS, to enable it to be split into a good and bad bank before being sold back into the private sector, as championed by some members of the parliamentary commission on banking standards.
The Treasury would not comment last night on the speculation about a possible IMF view on the stakes, which came amid expectations that more information would soon be provided about how major banks intend to plug the £25bn capital shortfall identified across the banking industry by the financial policy committee earlier this year.
A number of banks could soon provide information about how they intend to fill any discrepancies highlighted by the FPC. It was not immediately clear how many banks would be able to provide information or what their plans were to fill any shortfalls in announcements that could come as soon as on Wednesday .
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