The offer aims to replace the Government’s £4billion worth of preference shares in Lloyds for ordinary shares, thus reducing the Government’s stake in the newly formed banking group.

The deal offered existing shareholders the chance to buy 0.612 open offer shares for every existing ordinary share held, at a discounted price of 38.43p. And, although 13 per cent of the open offer shares remain unplaced, the 87 per cent placed has been enough to secure the deal.

The remaining 13 per cent of the open offer shares are now expected to be placed on the open market, and any that remain unsold after this will be bought by the Treasury and added to the Government’s existing stake in Lloyds.

City Minister Lord Myners told the BBC Radio 4 Today programme that he sees the move by Lloyds as “very real progress.”

“I think we have now moved into a new territory in which institutional investors are saying ‘We now have confidence in UK banks, their capital is strong and they are clearly again lending and supporting the UK economy.’ So it is good news,” he said, adding:

“I think there is still a great deal to be done. The world economy is still in a very nervous condition, but there are some signs in areas traditionally regarded as leading indicators that the underlying economy is moving to a position where improvement can be envisaged.”

© Fair Investment Company Ltd