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Lloyds raises £500 million through sale of loan book and German insurance arm
by James Phillipps on Aug 21, 2013 at 07:30
Lloyds Banking Group is to sell a portfolio of leveraged loans and its German life insurance business in separate deals worth £500 million.
The bank has signed an agreement to sell its German life insurance business to Heidelberger Lebensversicherung to a joint venture company owned by Cinven Partners and Hannover Rueck for €300 million (£250 million) and its portfolio of leveraged loans is being bought by Morgan Stanley in a deal initially worth £254 million. The banks said it will receive a further £2 million within six months if certain financial conditions are met. The loan book, which comprises a range of UK-based assets across a range of sectors including manufacturing and retail, generated profits of £11 million in 2012.
Heidelberger Leben has gross assets of £7.2 billion and in 2012 the business reported a loss of £38 million. Although the sale is expected to result in a loss on disposal of around £330 million in the bank’s accounts, combined with other sales, Lloyds says the combined effect will see its equity tier one capital boosted by £400 billion or 14 basis points. The deal remains subject to regulatory approval and is expected to complete in early 2014.
The banks says the move form part of its ongoing strategy to ‘rationalise its international presence’.
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