Lloyds Banking Group will become the first UK bank to repay some of the government's £37 billion sterling bailout of the British banking system after raising £3.5 billion from shareholders.
A number of banks are taking the first steps towards repaying taxpayers after massive state intervention at the height of the global financial crisis last year.
In the US, Morgan Stanley, JPMorgan Chase and American Express all announced plans in the last week to sell shares as they position themselves to repay billions of dollars borrowed under the US Treasury's Troubled Asset Relief Programme.
US regulators are expected to name the first round of banks allowed to repay bailout funds this week.
Lloyds said in a statement today that 87% of shareholders had accepted an offer to buy new shares at 38.43 pence each, a steep discount to Friday's closing price of 66.2 pence.
The remaining unallocated shares were being sold in the open market, raising a total of at least £4 billion which will be used to buy back preference shares issued to the government last year as part of a £17 billion injection into the banking group.
Despite the discount on the offer, analysts said it was not particularly surprising that some nervous and angry shareholders had chosen not to take part after an 86% slide in Lloyds' share price since early 2007.
Those who have not chosen to subscribe to the offer will get something for their pains over the last two years, however. They will receive any surplus from the open market placing that results from the difference between the offer price and the market price.
