Lloyds Banking Group (LYG) shares rose Tuesday after the U.K. government cut a further portion of its stake in the rescued lender ahead of its key autumn budget statement.
The sale, which takes the government's stake below the 8% threshold as part of a trading plan that is being managed by Morgan Stanley (MS) , places the government on track to achieve a full exit from the bank by October 2017, although it remains to be seen whether it will recoup all of the taxpayer's investment.
"Selling our shares in Lloyds Banking Group and making sure that we get back all the cash taxpayers injected into it during the financial crisis is one of my top priorities," Chancellor Philip Hammond said in a statement. "So I am pleased that we have continued to reduce our stake in Lloyds, and have now recovered over £17 billion for the taxpayer."
Lloyds stock rose 1.5% by 09:30 GMT to change hands at 60 pence each in London trading, extending a post-U.S. election gain to just under 7%.
The U.K. government has invested a total of £20.3 billion ($25 billion) in the bank, with the total amount split between a direct bail out, a rights issue and debt forgiveness. It said in October that it would give Morgan Stanley bankers full discretion over how and when to manage the exit from the bailed-out lender.
U.K. Financial Investments, which oversees the government shareholding, reported in its latest set of accounts that the government has raised more than £16 billion from Lloyds share sales during recent years.
Its remaining stake in the bank could be worth as much as £3.4 billion at current market prices, which means that the bulk of public money in the bank would have been recouped if the remaining stake is sold tomorrow.
The Lloyds Bank shareholding is just one of two major bank rescues carried out by the government in the wake of the financial crisis.
The other is Royal Bank of Scotland (RBS) , once the world's largest bank by assets, which is still 73% owned by the public purse.
RBS received a much larger £45 billion bailout after a disastrous takeover of ABN Amro weakened its capital buffers right at the time that the U.S. mortgage market was beginning to take a southward turn.
But today the entire bank is worth just more than half what the government paid for its stake, with a market capitalization of £24 billion, and an implied valuation for the public stake of around £17.5 billion.
The bank is widely expected to incur the largest of all fines from the U.S. Department of Justice - after it gets through with Deutsche Bank (DB) and the remaining pool of alleged offenders.
RBS stock was up more than 3.8% in London trading to 211.9 pence each, although it is still down some 30% for the year-to-date and sits well below the 502 pence average cost to the British taxpayer.