Government reduces its stake in Lloyds

The Government has reduced its stake in Lloyds Banking Group to less than 5% as the lender moves one step closer to full private ownership.

UK Financial Investments, which manages the stake in Lloyds, cut its holding in the lender by around 1%.

The taxpayer’s stake in the bank now stands at 4.99%, with more than £18.5 billion being returned to the Government coffers since the lender’s £20.3bn bailout.

It is the latest in a series of share sales by the Government, which said in October it hoped to offload its remaining shares in Lloyds within a year.

The Government has progressively sold down its original 43% stake in Lloyds.

Chancellor Philip Hammond ditched plans for a share sale to the public in October, opting instead to offload the holding to institutional investors.

Economic Secretary to the Treasury Simon Kirby said: “Since our decision to sell the Government’s stake in Lloyds we have recovered over 90% of the money taxpayers injected into the bank during the financial crisis.

“This represents real progress and I am delighted that we are on track to return Lloyds to private ownership.”

All proceeds from the sale will be used to reduce the national debt.

Mr Hammond has ruled out reducing the Government’s stake in Royal Bank of Scotland after it took a £3.1bn hit towards the cost of a bond mis-selling scandal in the US.

The charge will push RBS to its ninth consecutive annual loss. RBS has already incurred £50bn of cumulative annual losses since taxpayers pumped in £45bn to keep it afloat.

Mr Hammond said the Government regarded the 73% stake as a “long-term asset” and dismissed hopes that tackling the long-running bond mis-selling scandal might facilitate a stake sell-off.

Simon Kirby hailed the progress of the sell-off.