The taxpayer's stake in Lloyd's Banking Group has fallen to below 2% as the government continues to reduce its shareholding.
The bank moved a step closer to full private ownership after UK Financial Investments, which manages the stake in Lloyds, cut its holding by around 1% to 1.97%.
The sale means more than £20bn has now been returned to government coffers since the lender's £20.3bn bailout at the height of the financial crisis.
This includes around £500m in payouts to shareholders since the bank resumed paying dividends in 2014 as it has returned to profit growth in recent years.
The stake sale is the latest in a series by the government, which said in October that it hoped to offload its remaining shares in Lloyds within a year, with the City expecting Lloyds to return to full private ownership by June.
The economic secretary to the treasury, Simon Kirby, said: 'I welcome this further progress in returning Lloyds to the private sector.'
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