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.
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