By Max Colchester and Jessica Hodgson
LONDON--Lloyds Banking Group PLC (LYG) is in talks with Goldman
Sachs Group Inc. (GS) and private equity giant TPG Inc. to sell a
large portfolio of corporate loans as it seeks to further shrink
its pool of non-core assets, a person familiar with the matter
said.
Talks center on GBP1.2 billion of loans the bank acquired when
it merged with HBOS, this person said. Lloyds, which is
40%-government owned, is looking to cut down a pool of
capital-destructive loans and businesses in an attempt to slim its
way back to profitability. Lloyds still holds GBP118 billion of
non-core assets on its balance sheet.
The loan portfolio--codenamed Project Lundy--comprises around 50
debt positions in various companies.
Spokesmen for TPG and Goldman Sachs declined to comment on their
interest in the Project Lundy loans. It isn't clear what the
potential buyers have offered for the loans or whether the sale has
attracted interest from other parties.
Lloyds has been trying to shed the assets for a while, but banks
are currently finding it difficult to sell non-perfoming loans and
other similar assets. While they are keen to get these assets off
their balance sheet, they are wary of taking large discounts on
their value if this could damage their capital base.
The attempted sale of the Project Lundy loans comes after Lloyds
sold a portfolio of commercial property loans to Lone Star for
around GBP900 million.
Lloyds and peer Royal Bank of Scotland Group PLC (RBS.LN)--which
is 83%-government owned--have been seeking to shrink their balance
sheets and sell non-core businesses.
-Write to jessica.hodgson@dowjones.com