Lloyds Banking Group plc (LON:LLOY) is another step closer to being fully privatised after the taxpayer’s stake was cut to below 2%, even as the lender continues to tackle legacy issues.
UK Financial Investments, which manages the taxpayer’s shares in Lloyds, reduced the holding by about 1% to 1.97%.
More than £20bn has been returned to taxpayers since the government bought a 43% stake in the bank in a £20.3bn bailout during the 2007-09 financial crisis.
The economic secretary to the treasury, Simon Kirby, said: "I welcome this further progress in returning Lloyds to the private sector. We have now recovered over £20bn for the taxpayer and are very close to recovering all of the money taxpayers injected into the bank during the financial crisis."
UKFI resumed the sale of shares in Lloyds last October after stalling on plans to return the bank to private ownership a year earlier due to stock market turbulence.
At the time the government in October said it hoped to offload its remaining shares in Lloyds within a year. The City expects Lloyds will return to full private ownership by June.
The latest sale comes after the bank reported its highest full year pre-tax profit in a decade in March. It posted a 2016 statutory pre-tax profit of £4.2bn, more than double the £1.6bn recorded a year earlier, as payment protection insurance provisions (PPI) were slashed.
HBOS scandal...
However, Lloyds continues to face mounting litigation pressure as it emerged that two former employees of its HBOS subsidiary face prosecution for allegedly covering up fraud.
The Sunday Times reported the employees had allegedly tried to mask fraud at the HBOS Reading branch as the bank struggled financially, leading to a rescue takeover deal with Lloyds in October 2008.
Six people were jailed earlier this year over the case, which involved two former bankers at HBOS who siphoned off money from struggling businesses to fund lavish holidays.
Last month Lloyds said it had recruited professor Russel Griggs to conduct an independent review on compensation for victims of the HBOS scandal.
Lloyds said it has written to the majority of customers affected by the fraud since announcing a review in February.
Plans to shrink branches..
Meanwhile, the bank has announced plans to shrink the size of hundreds of its branches. The new ‘micro branches’ will be staffed by just two people, who will assist customers will using the machines.
Lloyds will in some cases board up the old counter sections of branches to reduce the size. Halifax and Bank of Scotland branches are among those being converted.
The lender said its decision to shrink branches was due to a growing trend towards online banking. Lloyds has already revealed plans to close 400 of its branches across the UK, which will result in 9,000 job losses.