Next March, seven years after the British taxpayer poured £20 billion of emergency funding into Lloyds Banking Group, the British government will finally disappear from the shareholder register of the bailed-out bank.

Its exit is being engineered via a cut-price sale of at least £2 billion of shares to the public, a sale chancellor George Osborne is billing as "the biggest privatisation in over 20 years".

In reality, it’s nowhere near the scale of previous privatisations. The 1986 sale of British Gas, subject of the “Tell Sid” advertising blitz, would be worth more than £14 billion at today’s prices. And Lloyds is already one of the most widely held stocks on the market, with an existing shareholder base of 2.7 million.

The bank is capitalised at more than £50 billion but the government has already sold the bulk of its stake to City institutions. The first tranche was unloaded in September 2013, raising £3.2 billion for the treasury. Recent sales have been conducted by drip-feeding small parcels of shares into the market on a regular basis and, as a result, the 43 per cent stake once owned by the taxpayer has been reduced to about 12 per cent.

That will be further reduced ahead of next year’s retail offer. In total, £15 billion of shares have been off-loaded into the market so far.

Those shares have been sold at a profit. However, because of the discount to be offered to the public, it’s possible the retail sale will show a loss, particularly after the inclusion costs, including a Tell Sid-style marketing campaign.

That’s not such good news for the taxpayer: unless, of course, they have the spare cash to apply for the cut-price shares. As shadow chancellor John McDonnell said, “Not many people losing £1,300 a year in tax benefits will be looking forward to buying Lloyds shares.”

Osborne could have chosen to continue dribbling Lloyds shares into the market, enabling the government to exit in a more controlled manner. But that would lack the razzmatazz of a hyped-up privatisation that will no doubt secure the votes of thousands of grateful investors.

At least £2 billion worth of shares is being set aside for small investors, who will be lured into the sale with the offer of a 5 per cent discount on the then market price, plus the chance to earn a 10 per cent loyalty bonus: if shares are held for more than a year, investors will receive one new free share for every 10 held, up to a value of £200. Investors applying for less than £1,000 of shares will be given priority in the share allocations.

Market analyst Laith Khalaf of Hargreaves Lansdown predicts the sale will be hugely popular, particularly with pensioners seeking better returns. Thousands of investors have already registered their interest at a government website launched on Monday to handle the sale.

On an investment of £1,000, Khalaf reckons investors will receive a discount of £50, plus another £50 or so in dividend payments next year. And, assuming the shares stay at similar levels to the sale price, there’ll be £100 of bonus shares after 12 months.

There’s no such thing as a sure bet in the stock market, of course, and the shares sale next spring could be derailed by any number of factors, from market turmoil to a renewed flare-up in the euro zone crisis or global recession.

There’s also a risk Britain’s frothy housing market could take a tumble as interest rates are finally raised from their record low of 0.5 per cent early next year. Lloyds is the nation’s biggest mortgage lender and would be hard hit by a property collapse.

Or, given the disgraceful track record of the banks, it’s always possible some new misdeeds will be uncovered that knock the sector for six at the worst possible time.

One other point for investors to bear in mind is that while Lloyds was one of the biggest dividend payers in the FTSE 100 before the financial crisis, there’s no guarantee shareholder returns will return to precrisis levels.

That said, and with the chancellor doubtless doing everything in his power to ensure the sale is a success, it looks like being as near to a safe bet as you can get.

Fiona Walsh is business editor of theguardian.com