UK taxpayer stake in Lloyds Banking Group drops below 2%

The UK taxpayer's stake in Lloyds Banking Group has dropped to below 2% of the business as the Government continues its efforts to return the bank to private hands.

Lloyds was one of the banks bailed out by the Treasury during the height of the financial crisis, with the Labour government spending £20.3bn for a 43% stake.

UK Financial Investments (UKFI), which manages the process, has been selling off shares since 2014 and is just £300m shy of recouping all of the money used for the bailout.

"We have now recovered over £20bn for the taxpayer and are very close to recovering all of the money taxpayers injected into the bank during the financial crisis," said the City Minister Simon Kirby MP.

The Government's current plan will see Lloyds returned entirely to the private sector by the autumn, but some in the financial industry expect the process to be completed as early as June.

Lloyds has also revealed plans to reduce the size of hundreds of its branches.

In some cases staffed counters will be removed in favour of self-service machines, with the "micro branches" taking up just 1,000 square feet.

The converted branches will also include some Halifax and Bank of Scotland locations, and will be staffed by two people each who will carry tablets to help customers use the machines.

According to Lloyds, the decision is due to "a profound change in customer behaviour" which has seen transactions increasingly being carried out online.