The share price of Lloyds Banking Group has surpassed 61.2p, the break-even point for the government's investment in the bank.
Currently, Lloyds is 39 per cent owned by the UK taxpayer after the government put £20.5 billion ($31.4 billion) into the bank in 2009.
Any share price above 61.2p would mean the government would make a profit if it began to sell of parts of its holding.
However, a Treasury spokesman has told the BBC there are no immediate plans to begin selling off its shareholdings in Lloyds or RBS, though the latter has said it expects to return to the private sector in 2014.
Lloyds is the UK's largest retail bank and shares have risen 125 per cent in a year. The bank is currently trying to offload 631 of its branches after its deal with the Co-operative Bank fell through in April.
Under European competition rules, which deemed the government's bailout as state aid, the bank must downsize.
By Tony Aynsley