Lloyds Banking Group is expected to resume dividend payments for the first time since receiving a Government bailout in 2008.
It comes as the Government has announced it has sold a further £500m of its stake in the bank, taking the total amount recouped by taxpayers to just under £8bn.
Chancellor George Osborne says: “This is further progress in returning Lloyds to private ownership, reducing our national debt and getting taxpayers’ money back.”
The Financial Times reports the bank is awaiting Prudential Regulation Authority approval before confirming the decision to pay a dividend of between 0.5p and 1p per share.
A 1p dividend payment would amount to a total of £713m to shareholders, including a £178.4m payment to UK Financial Investments, the Government body that still holds 23.9 per cent of Lloyds shares.
The bank has not paid a dividend since 2008. The Government has since invested around £20bn into Lloyds Banking Group, which returned to profit in 2010.
Lloyds declined to comment.
The bank is expected to report a £7.5bn pre-tax profit for 2014 in its results later this week, up from £6.2bn the previous year.