(Adds context, market reaction)
LONDON, May 19 (Reuters) - It is too early to talk about the British government selling its stakes in part-nationalised banks, a government source told Reuters on Tuesday.
"The government's key concern is to ensure value for money for the taxpayer and financial stability. We won't be rushed into this, and UKFI will look seriously at this only when the conditions are right," the source said.
Earlier, a person familiar with the matter said UK Financial Investments (UKFI), which manages Britain's stakes in Royal Bank of Scotland and Lloyds Banking Group, has sounded out investors who may be interested in buying some of its holdings.
The pound, which had earlier hit a five-month high above $1.55, came off more than half a cent in the wake of the government source comments.
The pound had earlier been climbing after the Financial Times reported on Tuesday that that UKFI had "substantial contact" with potential investors including UK institutions and foreign sovereign wealth funds.
Britain acquired the bulk of its 70 percent stake in RBS and its 43.5 percent stake in Lloyds as part of a taxpayer-funded bailout worth 37 billion pounds last year, as both banks grappled with soaring losses on risky credit-backed assets.
(Editing by Ron Askew)