UK government raises £500m by further cutting its stake in Lloyds Bank

LONDON (ShareCast) - The British government on Thursday reduced its stake in Lloyds Banking Group ahead of the upcoming UK elections in May. The UK government sold about £569m of shares in Lloyds, the nation's largest mortgage lender before elections in May.

The government's stake is now down to 21.9% from 22.98% and it now owns 15.7 billion shares versus 16.4 billion shares previously.

Thursday's disposal allowed the government to raise £500m. At the last disposal on March 9, the government also raised £500m.

"We have raised a further £500m through Lloyds share sales," UK Chancellor George Osborne said on Twitter (Xetra: A1W6XZ - news) . "Nine billion pounds now recovered and being used to pay down our national debt." Osborne and the Conservative party are cutting the government holding in Lloyds in the run up to the elections in a bid to convince the UK public that they have an exit strategy after bailing out the in the financial crisis.

The government officially took a 39% stake in Lloyds when it bailed out the bank. In 2013, the government started selling its shares.

The latest share sale comes just weeks after Lloyds announced its first full-year net profit and dividend payout since it was bailed out.

At 0810 GMT, shares in Lloyds were down 0.6% at 7993p.