Lloyds Banking Group Plc (LLOY)’s Australian unit is seeking buyers for an about A$750 million ($690 million) portfolio of loans, according to four people familiar with the matter.
The package comprises about 12 to 14 deals and includes mainly leveraged loans and some real estate debt, said the people, who asked not to be identified because the details are private. Lloyds has approached a number of potential buyers, including investment banks, private equity and distressed debt firms, and started marketing the debt today, the people said.
Britain’s biggest mortgage lender is off-loading assets it no longer considers essential to business as the bank continues to shrink its balance sheet after a government bailout in 2008. The bank said on June 20 it was making “significant progress” in strengthening its capital position by doing that.
Lloyds sold other assets it defines as “non-core” in Australia last year, including some distressed corporate loans to investors backed by KKR & Co. (KKR) in November, and 809 million pounds ($1.2 billion) of real estate loans to a joint venture between Morgan Stanley (MS) and Blackstone Group LP (BX) debt in June.
Banks are bolstering their balance sheets through asset sales as they try to meet stricter capital rules. At the same time, potential buyers of those assets, including hedge funds and banks with distressed investing units, are seeking to acquire them at discounted prices.
Lenders including HSBC Holdings Plc, Commonwealth Bank of Australia and Westpac Banking Corp. last week sold Billabong International Ltd.’s loans at discounts, according to people familiar with that matter. Suncorp Group Ltd. last month sold a A$1.6 billion package of mostly sour loans to Goldman Sachs Group Inc. at 60 cents for every dollar, the Australian lender and insurer said on June 13.
Lloyds expects first expressions of interest by July 15, the people said today. Goldman Sachs Group Inc. is acting as external adviser for the transaction, the people said.
The about A$750 million debt package is drawn to about A$600 million, the people said.
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