The Government is looking to reduce the overall size of the taxpayer stake in Lloyds and simultaneously shift more than five billion shares.
Chancellor tells ITV News the sale of £3.21bn worth of Lloyds shares will not necessarily trickle down to struggling households.
The Treasury has started the process of one of the most anticipated business deals in years, but will the taxpayer get their money back?
The chairman of Lloyds Banking Group has admitted the company's manipulation of key interest rates was "truly shocking".
The company has been slapped with a £218m fine from US and UK regulators for manipulating the LIBOR inter-bank rate and the Repo Rate.
The Repo Rate was the benchmark used by the Bank of England to calculate how much banks paid to take part in the Government's Special Liquidity Scheme (SLS) to support banks during the financial crisis.
Lloyds chairman Lord Blackwell has replied to a highly critical letterwritten to him by the Bank of England's governor, Mark Carney.
"I absolutely share your concern about the nature of the SLS conduct, and in particular its implication for reducing fees," Lord Blackwell wrote.
"This was truly shocking conduct, undertaken when the Bank was on a lifeline of public support."
He also agreed that Lloyds would pay nearly £8m back to the Bank of England for fees it should have paid for the SLS.
The governor of the Bank of England has warned that Lloyds and its subsidiary Bank of Scotland could face "further action" over the manipulation of benchmark interest rates.
In a letter to Lloyds chairman Lord Blackwell, Mark Carney said the BoE's Prudential Regulatory Authority would now consider whether to take further steps.
"In view of the seriousness of this matter, the PRA will consider whether further action should be taken in relation to the Firms or individuals at the Firms."
The banks have been fined for manipulation of the LIBOR rate and Repo Rate.
Bank of Scotland was formerly part of HBOS, which was taken over by Lloyds in 2009.
The governor of the Bank of England has strongly condemned Lloyds Banking Group for its attempts to manipulate two key interest rates.
Part of Lloyds' £218m fine from US and UK regulators relates to its attempts to reduce the fees it paid to the Bank of England for the Special Liquidity Scheme - a government programme to help struggling banks during the financial crisis.
The Bank of England has now published a letter from governor Mark Carney to the chairman of Lloyds, Lord Blackwell.
"Such manipulation is highly reprehensible, clearly unlawful and may amount to criminal conduct on the part of the individuals involved," Mr Carney wrote.
About £70 million of Lloyds' fine from financial regulators is for trying to manipulate the fees payable to the Bank of England for taking part in a government scheme to support British banks during the financial crisis.
The group is set to pay a total of £218 million to UK and US authorities after it became the latest lender to be punished over the rigging of interest rate benchmarks.
Lloyds said the manipulation took place between May 2006 and 2009, adding that those involved have either left the company, been suspended or are subject to disciplinary proceedings.
Barclays was the first to settle Libor rate-rigging claims, paying £290 million in penalties to US and UK regulators in June 2012, while state-backed Royal Bank of Scotland was hit with a £391 million settlement.
Lloyds Banking Group has agreed to pay fines worth £218 million to UK and US regulators in relation to the manipulation of Libor.
The US authorities have charged the bank with "manipulation, attempted manipulation and false reporting of Libor" between April 2008 and September 2009.
The firms manipulated the benchmark interest rate at which banks lend money to each other in order to reduce the amount it paid in fees to Bank of England.
Lloyds Bank is to cut another 500 jobs, bringing the total number lost to around 30,000 since the banking crisis unfolded in 2008, said the Unite union.
Lloyds Bank has increased the number of shares it is selling in TSB as a result of strong demand from investors.
The bank, a quarter of which is owned by the taxpayer, had initially decided to sell a 25% stake in TSB but has now upped the proportion to 35%.
The shares have been priced at 260p each, giving TSB a market value of £1.3bn.
A 25% stake in TSB is to be floated on the stock market next month, owner Lloyds Banking Group has announced.
Lloyds confirmed the job losses, but said 65 new roles will be created across group operations and retail.
A statement said: "Lloyds Banking Group is committed to working through these changes with employees in a careful and sensitive way. All affected employees have been briefed by their line manager today.
Compulsory redundancies will always be a last resort. In fact, since the strategic review in 2011 around only a third of role reductions have led to people leaving the group through redundancy."
Lloyds said that of 15,000 previously announced job losses, 13,055 will have gone after today's news.
The Unite union has said it will press Lloyds Bank for a guarantee of no compulsory redundancies as the banking group was revealed to be axing 645 jobs and closing a telephone banking centre in Warrington.
Over 2,400 jobs have gone at the taxpayer bailed out bank since the start of the year leading to "plummeting" staff morale, said Unite.
Half the job losses half will result from the Warrington site's closure by the end of 2014, in a move Unite branded as "unjustified" and a "bad deal" for customers. Most of the other cuts will be from the group's wealth business and HR function, said Unite.