The UK Treasury has further reduced its stake in Lloyds Bank to below 16%, bringing back more than £12.5bn (€17.6bn, $19.5bn) to its coffers from the shares sale so far.

The treasury now holds a 15.9% stake in the bank, down from the previous holding of 16.9%, Lloyds said in a stock exchange filing. The number of shares has been reduced to about 11.35 billion from 12.04 billion.

The government acquired a 41% stake in Lloyd's business in 2008 shelling out some £20bn. It steadily reduced its holdings in the bank, following the improvement in its share price in line with the country's economic recovery.

Chancellor George Osborne during his Mansion House speech had said that he wants to divest the government's entire stake in Lloyds and return the bank to the private sector over 2016.

He is also planning to kick-start the sale of shares in Royal Bank of Scotland, which was also rescued by the government along with Lloyds. The Treasury currently holds a 79% stake in RBS.

"I am determined to build on this success, and to continue to return Lloyds to the private sector and reduce our national debt," Osborne said.

The government earlier said it will be extending its sale scheme for Lloyds shares through UK Financial Investments and Morgan Stanley until the end of 2015.

Lloyds shares closed down 0.65% at 86.21 pence on 2 July. The government's remaining stake in the bank is worth £9.8bn at the current market price.