British government cuts stake in Lloyds to below 4 percent

(Corrects percentage of UKFI stake to 3.89 percent, paragraph 2)

LONDON, Feb 23 (Reuters) - The British government said on Thursday it has further reduced its stake in Lloyds Banking (Xetra: 871784 - news) Group, a day after the bank posted its highest profit since before the 2007-2009 global financial crisis.

UK Financial Investments (UKFI), which manages the government's stake in the lender, said in a statement it has reduced its stake in the bank to 3.89 percent.

Lloyds, which was rescued with a 20.5 billion pound ($25.48 billion) taxpayer bailout, is close to a complete recovery from its crisis-era past after more than doubling its profit last year and setting aside a lower amount to cover misconduct issues.

At the current sell down rate, Lloyds should be fully returned to private ownership by May. (Reporting by Pamela Barbaglia)