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Another chunk of taxpayers' stake in Lloyds Banking Group sold

Another chunk of taxpayers' stake in Lloyds Banking Group has been sold, potentially paving the way for the lender to be fully returned to private hands within six months.

UK Financial Investments, which manages the Government's stake in Lloyds, cut its holding in the lender to 6.93% from 7.99% less than a month after the last share sale.

The Government said in October it hoped to offload its remaining shares in Lloyds within a year, but experts said the pace of share sales suggests it could sell down the stake in its entirety far sooner.

Investec banking analyst Ian Gordon predicts the Government will have sold off its Lloyds stake as early as May or June.

The Government has progressively sold down its original 43% stake in Lloyds and Chancellor Philip Hammond ditched plans for a share sale to the public in October, opting instead to offload the holding to institutional investors.

Mr Gordon said the latest announcement of more share sales meant the Government "could be out in full by May or June time, if not sooner".

Mr Hammond has insisted taxpayer cash will be recouped in full even though shares are trading below the 73.6p average price paid at the time of the rescue.

Shares in Lloyds were hit hard in the stock market volatility caused by the Brexit vote and have yet to fully recover - trading at around 62p at current prices.

But Mr Gordon said given that the Government sold shares in Lloyds previously at far higher levels - around 80p last year - and with the possibility of further rises to come, the Government could even make a small profit.

More than £17.5 billion has already been returned to Government coffers since the lender's £20.3 billion bailout at the height of the financial crisis.

All proceeds from the sales are being used to reduce the national debt.

On announcing the latest share sale, e conomic secretary to the Treasury Simon Kirby said: "Selling our shares in Lloyds Banking Group and making sure that we get back all the cash taxpayers injected into it during the financial crisis is a key government priority."

A Lloyds spokesman said the sale " reflects the hard work undertaken over the last five years to transform the group".

Lloyds said in October it had set aside another £1 billion to meet compensation claims for the mis-selling of payment protection insurance (PPI), which left statutory pre-tax profits 15% lower year-on-year in the third quarter at £811 million.

Underlying profit for the third quarter came in 3% down at just under £2 billion.

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