By Mark Kleinman, City Editor
The Government signalled today that it would begin considering the sell-off of its stake in Lloyds Banking Group when the lender's share price hits 61p - a far lower level than previously thought.
Treasury officials said that reaching 61p would mean that the taxpayer had broken even on the tens of billions of pounds injected into the bank to keep it afloat in 2008.
The news confirmed Sky News' revelation earlier on Friday that UK Financial Investments (UKFI), which manages the taxpayer's 39% stake in Lloyds, and the Treasury would indicate that the privatisation of the Government's stake can begin within months.
The 61p level is the price at which the stake - bought in 2008 at the height of the banking crisis - is booked in the national accounts.
The £1.48m bonus awarded to Lloyds boss Antonio Horta-Osorio can vest if the Government sells at least one-third of its stake above 61p, Lloyds confirmed today.
Antonio Horta-Osorio became Lloyds chief executive in March 2011 "This award is subject to the normal performance adjustment policy and will only vest if a share price of 73.6p has been reached for a given period of time or the Government has sold at least 33% of its shareholding at prices above 61p," Lloyds said.
"The board believes that these additional conditions are in the interests of all shareholders and support our common aim of repaying the taxpayer.
"HM Treasury has informed us that 61p is the average price at which the equity support provided to Lloyds Banking Group is recorded in the Public Finances."
The news comes as Lloyds reported a loss for last year of £570m, down from £3.5bn in 2011.
The loss was attributable to a £3.5bn provision during 2012 for mis-selling payment protection insurance, £1.5bn of which was taken during the fourth quarter.
Lloyds paid out £365m in bonuses for the year, with an employee average of £3,900.
In a statement, a Treasury spokesman said: "The Government's strategy remains to see Lloyds continue the progress it has made in reforming itself into a strong and sustainable bank that supports the British economy, which in time can be returned to full private ownership.
"Today's results show that it is making strong progress in improving its core underlying performance and strengthening its balance sheet, but that there is still work to be done as it continues to deal with the legacy of the past."
Insiders said the Treasury acknowledged that it would have to persuade parliamentarians and the public that selling between 61p and 73.6p would not crystallise a loss for British taxpayers.
George Osborne, the Chancellor, is expected to pave the way for an initial sale of Lloyds shares later this year.
The FTSE 100 share price for Lloyds Banking Group dropped almost 6% to 51.2p in late morning trades on Friday.
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