Lloyds CEO, Antonio Horta-Osorio
(Bloomberg) Lloyds Banking Group Plc (LLOY), the U.K.’s second-biggest state-backed lender, agreed to sell private equity-related investments for 1.03 billion pounds ($1.6 billion) as it shrinks assets following its 2008 bailout.
The sale of the portfolio, which had losses of 40 million pounds in 2011, to a fund financed by Coller Capital Ltd., will result in a pretax gain for Lloyds after it reverses a provision, the London-based bank said in a statement today. The group will continue to manage the fund in exchange for a fee, probably less than 10 million pounds a year, it said.
Lloyds Chief Executive Officer Antonio Horta-Osorio is selling assets after the bank received a 20.3 billion-pound rescue following the 2008 credit crisis. Revenue and profit margins are being squeezed as the U.K. economy contracts and the Bank of England holds its key interest rate at a record low.
Bloomberg reported that the buyer is a fund financed by Coller International Partners VI, set up by London-based Coller Capital to purchase private-equity portfolios and stakes in closely held companies around the world.
Lloyds set up a so-called non-core division after its bailout to house assets that it plans to sell or wind down. The bank shrank the division by 44.9 billion pounds to 117.5 billion pounds in the year through June. The lender plans to reduce non- core assets to less than 70 billion pounds by the end of 2014.