Britain cuts Lloyds Banking Group stake to below 17 percent

A man passes the head offices of the Lloyds Banking Group in London March 9, 2009. REUTERS/Luke MacGregor

LONDON (Reuters) - Britain has cut its stake in Lloyds Banking Group LLOY.L to below 17 percent, the finance ministry said in a stock market disclosure on Tuesday, taking the total sum recovered by the taxpayer to 11.5 billion pounds.

The taxpayer’s stake has fallen by 1 percent to 16.87 percent as UK Financial Investments (UKFI), which manages the government’s stakes in bailed-out banks, seeks to cash in on increasing investor appetite in Britain’s biggest retail bank.

“Today’s announcement shows the further progress made in returning Lloyds Banking Group to full private ownership and enabling the taxpayer to get their money back,” a Lloyds spokesman said in a statement.

“This reflects the hard work undertaken over the last four years to transform the group into a simple, low-risk and customer-focused bank that is committed to helping Britain prosper.”

Lloyds was rescued at a cost of 20.5 billion pounds to taxpayers during the 2007-9 financial crisis.

UKFI has extended a 'trading plan' that allows Morgan Stanley MS.N to sell Lloyds shares beyond its current June 30 deadline until the end of the year.

The government is expected to offer retail investors the chance to participate in an offer of several billion pounds worth of Lloyds shares.

The retail sale, in addition to the shares sold through the trading plan, could enable a full exit in the next year.

Shares have been sold through the plan at an average of more than 80 pence, well above the government’s average 73.6 pence buy-in price.

Reporting by Carolyn Cohn, editing by Sinead Cruise