LONDON â€" Britain is preparing to sell part of its holding in the Lloyds Banking Group to institutional investors, the chancellor of the Exchequer, George Osborne, said on Wednesday, but he declined to set out a timetable for the sale.
While Lloyds was in a ‘‘good position’’ and investor appetite was increasing, a sale of the government’s larger holding in the Royal Bank of Scotland was still ‘‘some way off,’’ Mr. Osborne said in a copy of his remarks released before his speech at the annual Mansion House dinner attended by senior financial professionals.
With the shares of the Royal Bank of Scotland still trading wel below the level at which the government bailed out the bank in 2008, Mr. Osborne said he would start a review into whether to split off the bank’s troubled assets into a separate entity.
In his remarks, Mr. Osborne said that with hindsight, ‘‘splitting R.B.S. into a good bank and a bad bank was probably what should have happened in 2008.’’
The government holds 82 percent of R.B.S. and 39 percent of Lloyds.
Some lawmakers and analysts had urged Mr. Osborne to use the Mansion House speech to dispel some of the uncertainty surrounding the two banks and present a clear timetable for when the government would start selling the stakes. Pressure on the government to do so is building ahead of the next general election, expected in 2015.
But for Mr. Osborne, the stake sales are just part of a longer list of banking issues he has to resolve before that election. He is expected to back proposals in a report by a parliamentary banking committee earlier in the day to introduce! criminal sanctions against banking executives.
The 600-page review, which was commissioned by the Treasury, probably made uncomfortable reading for many in the room Wednesday evening, since one of the recommendations was to threaten banking executives with prison should they behave recklessly in their jobs.
Prime Minister David Cameron told Parliament on Wednesday that he was in favor of ‘‘penalizing, including criminal penalties against bankers who behave irresponsibly.’’
Also scheduled to speak at the Mansion House dinner was Mervyn A. King, who is retiring as governor of the Bank of England at the end of this month. Oneof the jobs he has to pass on to his successor, Mark J. Carney, the former governor of the Canadian central bank, is to improve the stability of British banks.
‘‘All our major banks remain highly leveraged,’’ Mr. King said in his remarks. ‘‘And of course the two biggest lenders to the domestic economy remain largely in state ownership. It is difficult to imagine a banking sector like that making a real contribution to any economic recovery.’’
Mr. King reiterated that there were clear signs of a modest economic recovery but that ‘‘growth is not yet strong enough.’’ Support for the recovery was still needed, he said, adding that ‘‘it will inevitably be a bumpy ride.’’
