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LONDON, Aug 5 (Reuters) - Lloyds Banking Group hastold potential investors it expects to pay out up to 70 percentof its earnings in dividends by 2015, the Financial Timesreported, sending shares in the British bank up over 3 percentin early Monday trading.
Britain owns 39 percent of Lloyds and is gearing up to startselling shares in the bank after they surged well above itsbreakeven price of 61 pence.
Lloyds Chief Executive Antonio Horta-Osorio said athalf-year results last week that he expects the bank to be a"high dividend" paying stock in the future, potentially payingout at least half of its earnings.
The Financial Times said he had told investors he wastargeting a 70 percent ratio, far above British rivals and mostglobal peers, citing people involved in the meetings.
Lloyds declined to comment on the specific payout ratioexpected.
The bank's shares were up 3.5 percent at 76.3 pence by 0800GMT, the strongest stock in the European banking sector.
Shareholders have not received a dividend from Lloyds sinceits ill-fated rescue of rival HBOS in 2008, when it was bailedout by Britain and ordered to halt payouts.
It said on Thursday it would talk to regulators aboutrestarting the payout, helping its shares surge, and was bullishon the long-term prospects for distributions.
"I think it is rather obvious that given our increasedreturns ... Lloyds will be a high dividend bank stock in thefuture because a small portion of our earnings will be necessaryto sustain loan growth, and all the rest ... will be able toflow into shareholders," Horta-Osorio told analysts.
The government could sell a tranche of about 5 billionpounds ($7.6 billion) of shares - or a quarter of its stake - toinstitutional investors, such as pension and hedge funds, thisweek, sources told Reuters on Aug. 1.
If it does not kick off the share sale process this week, itis likely to wait until September due to the market slowdownduring the August holiday period, bankers said.
($1 = 0.6548 British pounds) (Reporting by Steve Slater in London and Richa Naidu inBangalore; Editing by Leslie Gevirtz and Mark Potter)