Government cuts stake in Lloyds to below 2%

The government has cut its stake in Lloyds Banking Group to below 2%, meaning roughly £20bn has been returned to the state purse since it was bailed out during the credit crunch.

UK Financial Investments (UKFI), which manages the taxpayer's stake, sold 694.1m shares in the bank, it announced on Monday.

Taxpayers now own 1.4bn shares in Lloyds, which was trading at 66.5p just before midday on Monday.

The Labour government spent £20.3bn buying a 43% stake to bail out the bank in 2008 and, including dividend payouts restarted two years ago, and disposals in January, Feburary and March has recouped all but £300m of this total.

Last May, the government said it planned a retail sale of its 9.2% shareholding, fully returning the shares to the private sector between 2016 and 2017 but in October, the Chancellor announced the government would only make shares available to institutions rather than retail investors.

He said at the time that returning Lloyds to the private sector and recovering all of the cash the taxpayer injected into the bank during the 2008 crisis was the priority.