The taxpayers’ stake in Lloyds Banking Group is to be slashed after George Osborne pledged to sell a further £9 billion of shares.
This year’s sale will add to the £8.5bn recovered since £20bn was pumped into Lloyds during the financial crisis.
At current prices, the £9bn sale will reduce the Treasury’s stake from 23 to seven per cent.
Mr Osborne also announced plans for the sale of £13bn assets held from the forced nationalisation of Northern Rock and Bradford & Bingley.
But his Budget speech contained no reference to Royal Bank of Scotland, which is still 80 per cent owned by the taxpayer.
Selling the Lloyds shares has been made easier in recent weeks by the bank’s decision to pay a dividend to its three million shareholders for the first time since its the rescue.
The dividend, which raised at least £100m for the Government, was announced alongside a four-fold rise in annual profits to £1.8bn.
Meanwhile, Mr Osborne announced an increase in the annual bank levy from 0.156 to 0.210 per cent of total liabilities from next month, raising an additional £925m a year for the public finances.
“With banks now strengthening their balance sheets and returning to profitability, the government believes that the sector should be expected to absorb a greater burden of remaining deficit reduction,” he said.
The sum recovered since the 2010 formation of UK Asset Resolution (UKAR) - the state-owned firm responsible for winding down the mortgage books of Northern Rock and Bradford & Bingley - stood at £12bn in October.
UKAR said that a strategic review of options to accelerate repayment of the government loans found positive investor interest in the assets of both B&B and Northern Rock, as well as in the mortgage servicing capabilities of UKAR.