LLOYDS Banking Group offloaded some £500 million worth of assets yesterday to beef up its balance sheet amid more stringent regulatory capital rules for the sector.
The bank – near-40 per cent owned by the taxpayer following a £20 billion bailout in 2008 – sold its German life insurance business Heidelberger Leben for £250m and a portfolio of loans for £254m.
The sales came after the Bank of England told Lloyds’ chief executive Antonio Horta-Osorio last June that he had to find £8.6bn extra against potential provisions for any future losses, regulatory fines and redress for product mis-selling.
A statement from the bank on the sale of the loss-making German insurance division, which had been widely trailed, said it was “in line with the group’s strategy of rationalising its international presence and ensuring value for shareholders”.
Lloyds inherited Heidelberger when it bought Halifax Bank of Scotland (HBOS) during the financial crisis.
Heidelberger – bought by HBOS in 1995 – has about 330,000 customers across Germany and underwrites £7.2bn of policies. It is headquartered in Heidelberg and employs some 300 people. Lloyds said the business made a loss of £38m last year.
The operation is being bought jointly by private equity group Cinven Partners and German insurer Hannover Ruck.
The loan portfolio also sold yesterday has been acquired by ELQ Investors, a subsidiary of investment banking giant Goldman Sachs. The portfolio has assets of £283m and made an £11m profit in 2012.
Lloyds recently sold its $5bn (£3.2bn) US mortgage book, Spanish retail banking arm and international private banking business.
It has said that it aims to halve what it sees as its non-core loan book to about £70bn by the end of 2014 compared with £141bn in late 2011.
In the first six months of this year the bank made a £2.1bn profit compared to a £456m loss in the same period of 2012.
Lloyds’s shares were virtually unchanged at 73.9p.