Lloyds Banking Group is set to pay back £2.3 billion to the taxpayer after strong backing for its £4 billion fundraising.
The bank is the first to return part of the emergency funds pumped in by the Government at the height of the financial crisis last autumn.
It has raised the £4 billion to buy back the special Treasury preference shares issued to prop up its balance sheet.
The Government currently owns 43.4% of the bank and bought £1.7 billion in normal shares under the offer, but Lloyds has also raised £2.3 billion from other investors to pay off the preference shares.
Lloyds said 87% of shares were taken up by existing investors, with the remainder sold in the market.
The profit from the sale of the left-over shares will be split among those shareholders who did not take part - meaning the average investor with 550 shares will receive a cheque for £73.
Because all the shares were sold, the Government's stake remains unchanged.
Freeing itself of the preference shares - issued during last autumn's financial crisis - relieves an important burden for Lloyds because they cost it £480 million in payments every year. It also means that the bank will be able to resume dividend payouts on its ordinary shares when its finances are strong enough.
Chief executive Eric Daniels said: "We believe our shareholders will welcome the removal of the dividend blocker and the £480 million annual saving now we are redeeming the Treasury preference shares.
"The focus of our management team continues to be on ensuring a successful integration and delivering significant benefits for our shareholders in the medium to longer term."
