Government reduces stake in Lloyds to less than 1%

UK Financial Investments, which manages the Government’s stake, said on Friday that it now holds just 0.89 per cent of Lloyds’ shares

Lloyds is now close to recovery after reporting profits had doubled in the first quarter of the year (Getty)

The Government has reduced its stake in Lloyds Banking Group to less than 1 per cent, keeping it on target to offload the final shares in the bailed-out lender within weeks.

UK Financial Investments, which manages the Government’s stake, said on Friday that it now holds just 0.89 per cent of Lloyds’ shares.

The Treasury spent £20.3bn buying a 42 per cent stake in Lloyds at the height of the financial crisis in 2008 and announced last week that it had finally recovered its original outlay.

In total, the Government has so far only managed to recoup around half of the £136.6bn it pumped into Britain’s high street lenders, including RBS.

Last week, Chancellor Philip Hammond admitted that it was likely taxpayers would see a loss on RBS shares, which have languished well below their pre-crisis peak amid huge bills for past misconduct and a seemingly never-ending restructuring programme. The Government still owns 72 per cent of RBS, which has never returned an annual profit since being rescued in 2008.

Lloyds is now close to recovery after reporting that profits doubled in the first quarter of 2017 compared with the first three months of last year. Underlying profits were flat, the bank announced on Thursday.

Lloyds has paid more than £17bn to cover the costs of a PPI scandal and has set aside £100m to compensate the victims of fraud committed by two former employees at HBOS, which it owns.

Earlier this month, Lloyds announced the locations of 100 branch closures that will lead to 325 job losses. The move was part of an effort by chief executive Antonio Horta-Osorio to cut costs that will see 12,000 jobs go by the time it is complete.