Lloyds sells Halifax estate agents, with 460 jobs lost

Published on Friday 16 October 2009 21:29

LLOYDS Banking Group yesterday sold its loss-making Halifax estate agency business for a token £1 in a deal that will lead to the loss of 460 jobs.

It came amid reports the UK's financial watchdogs will this weekend back the bank's plans to raise billions of pounds in a rights issue – which is likely to cost the government a further 5 billion to buy new shares.

The estate agency business is being sold to LSL Property Services, owner of the Your Move, Reeds Rains and Intercounty chains. Lloyds only revealed it was in talks with LSL on Tuesday. Analysts dubbed the deal "transformational" for LSL.

Analysts and industry insiders called the disposal a "tidying up exercise" and reckoned it would have no impact on European Union negotiations about the bank's reliance on state aid. Those talks are likely to result in Lloyds being ordered to make large-scale disposals.

Yesterday's agreement came less than 48 hours after The Scotsman revealed the bank was in talks to sell the investment portfolio management service of HBOS, which it took over last year, to British wealth manager Rathbone Brothers.

LSL will take over 218 Halifax agency branches, taking its total to 584 and making it the country's second-biggest estate agent, behind Countrywide. The sale will result in the loss of 360 jobs as banking counters operating within estate agency branches are closed, Lloyds said. As several jobs are part-time, the move will affect 460 employees, all located south of the Border. The agency employs about 1,050.

The bank said compulsory redundancies would be "a last resort".

As part of the deal, Lloyds also agreed to provide 22.2 million in cash to cover LSL's restructuring and rebranding costs, as well as some working capital.

In a statement, LSL also said it was seeing glimmers of hope in a "slightly improving" housing market, as shown by recent rises in house price indices from the Halifax and Nationwide.

Numis Securities analyst Chris Millington said: "Overall, we believe this is a transformational deal for LSL as it adds scale at the bottom of the cycle and we are comforted by management's previous experience in turning around loss making estate agencies."

The deal is expected to complete on 15 January, subject to shareholder approval.

Lloyds shares closed up 1.69p at 93.1p, while LSL gained 23p, or 9 per cent, to 285p yesterday.

Lloyds, which is 43 per cent owned by the taxpayer, has been locked in talks with the UK's tripartite authorities and Europe about its government bail-out last year.

Lloyds plans to raise 25bn, including an 11bn rights issue, to allow it to escape a costly government-backed scheme to insure it against credit losses.