Lloyds Banking Group's shares fell 4 percent Monday, dragging down the FTSE, after reports in the UK press that it was considering a share issue to try and loosen the government's grip.
A Lloyds spokesperson contacted by CNBC refused to comment on the reports.
The bank, which merged with crisis-hit HBOS last week, may consider a multi-billion pound share issue as part of a partial withdrawal from the government's asset protection scheme, the Sunday Times reported.
Chief executive Eric Daniels is reported to think that the fees attached to the taxpayer-backed insurance policy are too high, and give too much control to the government it added.