The British government has sold its stake in Lloyds Banking Group down to under 6%, meaning it is no longer the bank's biggest shareholder.

Following a £20.5bn bailout during the financial crisis, the government had held a 43% stake in Lloyds.

It has now recovered over £18bn from that rescue injection.

All proceeds from the latest 1% sale, will be used to reduce the national debt. The government had shed 1% as recently as December.

UK Chancellor of the Exchequer, Phil Hammond said:

"Returning Lloyds to the private sector and recovering all the cash the taxpayer injected into the bank during the financial crisis is the priority for the government.

"Confirmation that we are no longer the largest shareholder in the bank and that we’ve now recouped over £18bn for UK taxpayers is further evidence that we are on track to recover all of the £20bn injected into the bank during the financial crisis."

The government is aiming to return the bank to full private ownership this year. Blackrock, which is the world's biggest fund manager, is now Lloyds' biggest shareholder.

British taxpayers still holds a roughly 71% stake in Royal Bank of Scotland (RBS).

Between October 2008 and December 2012, over €1.6 trillion was pumped into troubled banks across Europe by EU member states.