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Taxpayer stake in bailed-out Lloyds cut to less than 4%

Lloyds Banking Group has edged a step closer to full private sector ownership as the Treasury cut its stake in the lender to less than 4%.

The disclosure comes a day after the business - which owns Halifax and Bank of Scotland as well as Lloyds Bank - reported that annual profits had more than doubled .

It means the taxpayer stake in the group now stands at 3.89%, having been as high as 43% when it was rescued at the height of the financial crisis.

The latest disposal by the Treasury of about 1% of shares in Lloyds - worth just under £500m on current market value - means more than £19bn has now been returned to Government coffers since the £20.3bn bail-out.

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But the current price of around 70p is lower than the 73.6p "break-even" price which would see taxpayers recover the value they paid for the stock.

Chancellor Philip Hammond has ditched plans for a share sale to the public, opting to continue the steady sales of smaller chunks of the group to institutional investors.

At the current rate, it should be fully out of the Government's hands by the middle of this year.

Simon Kirby, Economic Secretary to the Treasury, said: "Lloyds' strong annual results show that we are in a good position to continue to reduce our shareholding and recover all of the money injected into the bank during the financial crisis."

Shares (Berlin: DI6.BE - news) were 0.2% down by the close of Thursday trading having risen by 4% after Wednesday's results.

They showed a 158% rise in profits to £4.2bn for 2016 as Lloyds benefited from having to put less money aside to compensate customers mis-sold payment protection insurance (PPI) than it did the year before.