Chancellor boosted by sales of bank group shares

Mr Osborne claimed the £3.2bn sale of a 6 per cent slice of the bank to institutional investors represented a half-billion pound boost to the public accounts – because of the way it is valued on the Government’s books.

He indicated that the disposal of the rest of the Treasury’s holding, now standing at 32.7 per cent, may be opened up to the public in a stock market float likely to revive memories of the major privatisations of the 1980s.

The sale came five years to the day after then-Lloyds TSB stepped in to swallow up troubled Halifax Bank of Scotland during the financial crisis in a disastrous move that saw it needing to be rescued itself with a £20bn Government bail-out.

This first tranche of the re-privatisation saw financial institutions mainly from the UK and United States snap up stock at 75p per share, above the 73.6p average price paid by the Treasury.

The identity of the investors has not been disclosed though sources said the biggest single block was from the UK while most shares went to US or UK buyers.

Shares were down more than 2 per cent as the sale took much of the demand for Lloyds out of the market. No further sale of the taxpayer stake can take place for another 90 days.

The sell-off also came after Lloyds announced half-year profits of more than £2bn this summer, following a turbulent recovery hampered by the payment protection insurance mis-selling scandal that cost billions.