In a statement published on Friday, Lloyds said it was in "late-stage" talks over the sum, but insisted it had not yet agreed on a final figure.
The bank could be facing a fine of £200m-£300m, and is expected to pay the City regulator, the Financial Conduct Authority (FCA), as well as regulators in the US.
It said: "Lloyds Banking Group plc (LBG) notes the recent media coverage regarding potential settlements with a number of government agencies and their investigations into submissions, communications and procedures around the setting of Interbank Offered Rates [Libor] and other benchmarks.
"LBG confirms that it is in late-stage settlement discussions with a number of agencies. The settlements remain to be agreed and LBG expects they will include the payment of penalties. LBG will update the market on these issues as appropriate."
Lloyds, which is 24% owned by the taxpayer, is poised to become the seventh institution to reach a settlement over the rigging of the benchmark interest rate. Barclays was the first to be fined by regulators on both sides of the Atlantic in June 2012, paying out £290m. It was followed by settlements with the Swiss bank UBS, bailed-out Royal Bank of Scotland, Dutch bank Rabobank, and two money brokers, Icap and RP Martin.
Earlier this month, when the prospect of a settlement was first raised, Lloyds said it was co-operating with investigations.
At the time of the Barclays fine the FCA had said it been looking at seven or eight cases, and last week Martin Wheatley, chief executive of the authority, implied that the most serious abuses had already been addressed.
"The remaining cases weren't as serious as the cases we took first," he said at the FCA's public meeting.
When RBS was fined £390m in 2013, the government demanded that bonuses were retracted in order to ensure that UK taxpayers did not pay penalties being imposed by US regulators.
Previous Libor fines have been accompanied by the release of pages of emails and electronic chats between traders, including details of attempts to manipulate rates. The Lloyds settlement is expected to involve a similar batch of documents. In the wake of the Libor scandal, several other examinations have begun into other benchmarks used to rate financial products around the world, and foreign exchange markets and the pricing of gold have also come under scrutiny.
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