Lloyds Banking Group and its advisers have begun sounding out investors about a £15bn capital raising, a move they believe could allow the bank to withdraw entirely from the government-sponsored asset protection scheme.

The transaction, if successful, would constitute the biggest ever British rights issue, beating the £12.5bn raised by HSBC in the spring.

People close to the deal’s planning said the Financial Services Authority was scrutinising the plan, which would also see Lloyds sell assets, such as insurance business Scottish Widows, and shrink its balance sheet.

The government, which owns a 43.5% stake in Lloyds, is understood to be supportive and would be likely to subscribe to the rights issue, meaning it could inject up to a further £6.5bn of public funds. However, no final decision has yet been taken. One person close to the affair said the bank was due to present a detailed plan to Alistair Darling, the chancellor, in coming days.

Financial Times, The Times