By Ian Walker 

LONDON--The U.K. government has reduced its stake in Lloyds Banking Group PLC to 23.9%, raising around GBP500 million ($770 million).

In a London Stock Exchange shareholding notification Lloyds said that The Commissioners of Her Majesty's Treasury now owns 17.09 billion shares, or 23.9% of the bank's voting rights. It previously held 17.14 billion shares.

No price for the share sale, which was conducted on Friday, was disclosed. Lloyds shares closed Friday at 77.98 pence and rose around 1.3% after trading opened on Monday. The transaction comes just days before the bank reports full-year earnings.

The U.K. Treasury on Monday confirmed that it had sold around GBP500 million of shares in Lloyds, taking the total amount of money recovered for the taxpayer to just under GBP8 billion.

The U.K. government bailed out Lloyds during the financial crisis, taking a 39% stake in the U.K.'s biggest retail bank, which it started selling in late 2013.

The government said in December it would sell a further chunk of shares in Lloyds by the end of June and mandated Morgan Stanley to gradually sell stock at above the 73.6 pence a share average price U.K. taxpayers paid to bail out the bank.

Previously U.K. Financial Investments Ltd, the body which manages the government's stake in the Lloyds, has sold chunks of Lloyds directly to investors through accelerated placements.

Write to Ian Walker at ian.walker@wsj.com

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