Royal Bank of Scotland is reportedly preparing to raise billions of pounds from a share sale just months before the next general election.
At least 10% of its stock is likely to be sold at the end of 2014 - a move that could raise £5 billion for the Government ahead of a 2015 election, according to The Sunday Times.
It would be the first time cash was returned to the taxpayer since the Government spent £45.5 billion bailing out the lender in the wake of the financial crisis in 2008.
RBS declined to comment, but the report comes amid further pressure on Chancellor George Osborne to reduce Government debt after ratings agency Moody's downgraded the UK's AAA credit rating to AA1 on Friday.
There has been political pressure for RBS to be returned to the private sector with Prime Minister David Cameron recently urging RBS bosses to "accelerate" the process of strengthening the company in preparation.
Taxpayers are still sitting on a paper loss of around £14 billion as shares remain below the £5 break even price paid by the Government.
The lender will announce its full year results on Thursday and banking analyst Ian Gordon at Investec Securities is expecting compensation provisions for mis-selling to plunge RBS even deeper into the red with losses of £3.9 billion in 2012 - far worse than the £766 million loss reported for 2011.
RBS, which is 81% owned by the state, disclosed in November that it was taking an additional £400 million in claims relating to payment protection insurance.
It also comes after the lender was fined £390 million by US and UK regulators this month after evidence emerged of traders fixing the Libor interbank lending rate.
A report in The Sunday Telegraph suggests the bank will also announce plans to cut the size of its investment bank by £30 billion and cut hundreds of jobs.
It has already cut its investment banking balance from £500 billion in 2008 to £300 billion and has cut more than 5,000 jobs, with its investment arm now employing around 11,000 people.
There is also speculation that RBS has hit further troubles in trying to offload the 316 branches to appease EU rules on state aid.
Following the collapse of the sale to Santander, RBS is now said to be looking at selling a minority stake to private equity and institutional investors to kickstart the auction process.