Lloyds Banking Group
The UK government holds a 32.7% stake in Lloyds Banking Group after a financial crisis bailoutReuters

The UK government may sell off its remaining stake in Lloyds bank in 2014, according to a media report.

The Daily Telegraph, citing "sources close to the process", reported that the government could complete the privatisation of the Lloyds group in 2014 with the sale of its remaining stake of around 33% currently worth £18.4bn ($30.3bn, €22.1bn).

Insiders told the newspaper that the entire stake could be sold within the next 12 months through a combination of institutional sales and a nationwide offering to the public.

"Post-results is when a further institutional offering would make most sense. After that, the thinking is an autumn sale, combining an institutional and a retail segment, is a realistic prospect," the newspaper quoted a source as saying.

The bank may also start paying dividends to shareholders, according to a source.

"The full privatisation of the bank in 2014 may be a stretch and will be largely dependent on what it says about the dividend. Positive comments could open the way for a full exit," the source said.

The resumption of dividend payments is considered as crucial for privatisation. The bank has stopped paying dividends since it was rescued through a state-funded £20bn bailout in 2008.

The bank has recently improved its results, though it has been hit by billions in litigation and compensation costs relating to the past, such as the mis-selling of financial products. It is widely expected to resume dividend payments.

Successful Earlier Sale

Three months ago, Chancellor George Osborne authorised the sale of a 6% stake in the bank for the first time after its rescue. The government raised £3.2bn from the sale of the stake to institutional investors.

The sale in September was hailed as a value-for-money success by the National Audit Office (NAO), a public finances watchdog, despite the taxpayer losing £230m in the deal.

Following the first sale, speculation is growing that the Chancellor would announce further sale after the bank's publication of its full-year results on 13 February.

UK Financial Investments (UKFI), which controls the state's holdings in bailed-out Lloyds and Royal Bank of Scotland, is reportedly considering different options for the next sale of Lloyds shares.

The UKFI is "developing the best mechanism" to allow the general public to take part in a future sale of Lloyds shares. "These preparations will allow those who rescued the bank to participate in its exit from government ownership," according to the Treasury's Autumn Statement.

Shares in Lloyds that have risen more than 60% in 2013 closed at 78.84 pence on the London Stock Exchange on 27 December, valuing the group at £56.5bn.