UK Financial Investments (UKFI), a part of the UK Treasury that owns Lloyds Banking Group, is planning to sell 7.5% stake in the bank for £4.23bn.

The sale of 7.5% stake or 5.35 billion shares will reduce the government’s stake in Lloyds from current 32.7% to 25%.

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In September 2013, the UK government sold 6% stake in the bank for £3.21bn, reducing its stake then from 39% to 32.7%.

The government had originally acquired around 40% stake in Lloyds after injecting £20bn during the financial crises in 2008.

UK Treasury spokesman said UKFI advised the Chancellor it would be appropriate to sell another part of the government’s shareholding in Lloyds Banking Group.

"The government agrees with that advice and has authorised the process to begin," spokesman added.

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Lloyds Banking Group CEO, Antonio Horta-Osorio, said, "I believe this reflects the hard work undertaken over the last three years to make Lloyds a safe and profitable bank that is focused on helping Britain prosper."

Bank of America Merrill Lynch, JPMorgan, Morgan Stanley and UBS will lead the offer of the shares to institutional fund managers, while Lazard serves as a capital market adviser on the deal.