Lloyds may put famous brands up for sale to cut debt

Published on Sunday 29 March 2009 21:47

LLOYDS Banking Group is understood to be carrying out a review of its insurance businesses in a move that could see it put some of its famous brand names up for sale.

The group, which was created this year through the merger of Lloyds TSB with HBOS, is believed to have hired Deutsche Bank to look at its insurance assets, weekend reports claimed.

Lloyds already had a life insurance arm through Scottish Widows before the HBOS takeover, when it acquired Clerical Medical and Halifax Life Insurance.

There is thought to be considerable overlap within the life insurance arms of the enlarged business and speculation about their future has been growing.

The group has announced that it plans to make more than 1.5 billion of cost savings by 2011 and it is thought that up to 200 million of this could come from combining the Lloyds TSB and HBOS life insurance and investment businesses.

It is believed that the review, which was launched last month, could lead to one of the life insurance businesses being sold, in a move that would help to boost Lloyds' battered balance sheet and enable it to repay its government debt more quickly.

But selling one of the businesses in the current market may prove difficult. Royal Bank of Scotland was forced to shelve the sale of its general insurance arm, which includes Direct Line and Churchill, this year due to a lack of interest.

The government currently holds a 65 per cent stake in Lloyds, which could rise as high as 77 per cent following a deal to insure 260bn in toxic debts – mostly inherited from HBOS.

A Lloyds Banking Group spokeswoman declined to comment.