Lloyds Banking Group must plug a capital shortfall of GBP8.6 billion. This was after a statement released by Britain's banking regulator on Thursday. The announcement came a day after the government signaled plans to return the part-state owned company to the private sector.

Apart from the large minority stake in Lloyds, Britain also owns roughly 81% of Royal Bank of Scotland. The state is trying to restore confidence in the banking sector that had to be rescued by taxpayers during the financial crisis in 2007 to 2009.

An outlined plan was already drafter in March to raised GBP12.5 billion this year. This is about half the total shortfall in capital. The Prudential Regulation Authority (PRA) said that the aggregate capital shortfall at five UK banks at the end of last year.

The focus is for banks to have a core capital buffer equivalent to 7%. This is the minimum level under new global Basel III capital rules now being phased in.