Lloyds Banking Group Plc (LYG, LLOY.L) Wednesday said it is selling a portfolio of Australian corporate real estate loans worth 809 million pounds to AET SPV Management Pty Ltd. for about 388 million pounds cash. The company intends to use the sale proceeds to repay debt.
Lloyds stated that the transaction is in line with its strategy of de-risking its balance sheet and reducing its non-core assets.
AET SPV Management is a joint venture of funds sponsored by Morgan Stanley and Blackstone. Closing of the deal is expected in the third quarter, after obtaining necessary third party consents.
Dave Smith, CEO of Lloyds International Pty Ltd said, "This transaction further de-risks the Australian business, and results in a cumulative 92% reduction of our real estate non performing loan portfolio. We continue in parallel to focus on growing the profitable core of our business."
According to the company, the asset portfolio recorded losses of 183 million pounds for the year ended December 31, 2011. Lloyds noted that the impact of the transaction on the Group is not material due to provisions already made against these assets.
Last month, Lloyds Banking reported a small profit for the first quarter compared to prior-year's loss, reflecting mainly further reduction in costs and impairment charges. The company made a hefty 3.2 billion pounds provision last year for payment protection insurance or PPI. In this year's quarter, it made further PPI provisions of 375 million pounds.
Bailed-out Lloyds is pruning its non-core assets to improve its financial standing, and has reduced assets by 53 billion pounds last year. It has also sought buyers for loans, mostly a legacy of the takeover of HBOS in 2008.
LLOY.L is currently trading at 26.13 pence, up 1.59 percent on a volume of 8.82 million shares on the LSE.
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