LONDON - Britain's finance ministry insisted Saturday it would dispose of its majority stake in the Royal Bank of Scotland "at the appropriate moment" amid reports ministers were considering a share giveaway.
RBS could be ready to return to the private sector later this year, but at present prices that would represent a huge loss to British taxpayers.
They own 81 percent of the Edinburgh-based bank after it was bailed out to the tune of £45.5 billion (S$87.47 billion) at the height of the global financial crisis in 2008.
At current share prices, the taxpayers' stake is worth £31 billion.
A senior government source was quoted by The Independent newspaper as saying of giving away shares: "This is something which is being looked at very seriously and officials have been asked to come up with a range of options for us to consider.
"There is a realisation that there is no prospect of RBS's share price rising to the level at which we bailed the bank out and it's not good for the bank or the government to hold on to our stake indefinitely.
"Obviously a give-away to taxpayers before the election, who, after all, paid for it in the first place, is very attractive."
A Treasury source was quoted as saying: "What you have got to look at is not what was paid for the shares but what are the prospects for them to appreciate?
"To get back what we paid for them will take many years and you have to ask yourself, 'is it worth holding on for that long with all the political headaches that entails?'."
Last week the bank was fined $612 million (453 million euros) over Libor rate rigging.
Libor, or London Interbank Offered Rate, is a flagship instrument used all over the world, affecting what banks, businesses and individuals pay to borrow money. Euribor is the eurozone equivalent.
Sources in Prime Minister David Cameron's Conservative Party told the Daily Mail newspaper that finance minister George Osborne saw continued ownership as politically "untenable" amid Libor-fixing and other scandals and was keen to end the state's role soon.
They told the newspapers that Sajid Javid, the economic secretary to the Treasury, had been tasked with drawing up options and that giving everyone in the country shares worth £300-£400 would be a vote winner and stimulate the economy.
However, on the record the Treasury insisted it would dispose of its stake in RBS "at the right time and in the interests of the taxpayer".
The Treasury insisted that no decisions had been taken and that its aim remained to return RBS to the private sector "at the appropriate moment".