Taxpayer stake in Lloyds Banking Group cut below 1%

The taxpayer's stake in Lloyds Banking Group has been cut to below 1 per cent as the government edges closer to fully privatising the lender.

The taxpayer now owns just 0.89% of Lloyds Banking Group. Picture: Contributed

UK Financial Investments, which manages the stake in the Bank of Scotland and Halifax owner, cut its holding by about one percentage point to 0.89 per cent.

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Last week, Chancellor Philip Hammond said the government has recouped the £20.3 billion used to bail out Lloyds during the financial crisis.

At its peak, Lloyds was 43 per cent owned by the state.

More than £20.4bn has now been returned to government coffers since the lender’s bailout. This includes about £500 million in payouts to shareholders since the bank resumed paying dividends in 2014 as it has returned to profit growth in recent years.

The taxpayer’s final stake in Lloyds is expected to be sold off in the coming weeks, with any profits being used to pay down the deficit.

The announcement comes a week after the Chancellor admitted that the government is prepared to sell its 72 per cent stake in Royal Bank of Scotland at a loss to the public purse.