LONDON, June 9 (Reuters) - British finance minister GeorgeOsborne will launch the early sale to the public of shares inbailed-out lender Lloyds Banking Group, the SundayTimes reported without citing sources.
Shares the government owns in Royal Bank of Scotland, also rescued during the financial crisis, will be soldat a later date, the paper said.
Osborne will announce the sale of the state's 39 percentstake in Lloyds, which could raise up to 17 billion pounds ($26billion), during his annual policy speech to London's businesscommunity at Mansion House on June 19, the paper said.
The Treasury declined to comment on Sunday, and Lloyds saidit was a matter for the government.
Osborne is under pressure over a widely unpopular austerityprogramme aimed at cutting Britain's huge public deficit.
Offloading shares in Lloyds could be relativelystraightforward, given they are trading above the price at whichthe government considers it would break even on the transaction.
A report by thinktank the Policy Exchange, due to bepublished on Monday, will support selling Lloyds shares, but viaa different structure. It will recommend taxpayers are givenshares, keeping any profits but with the original cost returnedto the government when they sell them, sources familiar with thereport said.
Any decision on both banks' future will also likely beinfluenced by a report from the Parliamentary Commission onBanking Standards, expected to be published next week.
For RBS, the commission will put forward as one optiondividing the lender into a 'good' and a 'bad' bank as a way ofring-fencing its toxic assets, political and industry sourcessaid on Tuesday.
RBS has already undergone one massive restructuring sincethe government pumped in 45.8 billion pounds ($70 billion) in2008 to keep it afloat, leaving taxpayers with an 81 percentstake.
UK Financial Investments, which manages the government'sbank stakes, could not immediately be reached for comment.