Lloyds Banking Group Plc (LLOY), Britain’s biggest mortgage lender, is studying a sale of its unprofitable Australian business, two people with knowledge of the matter said.
Lloyds is working with Goldman Sachs Group Inc. (GS) on the possible sale of Lloyds International Pty, which includes the Capital Finance and BOS International units, said the people, asking not to be identified as the details are private.
The bank, part-owned by the U.K. government, is divesting assets it no longer considers essential as it shrinks its balance sheet after a bailout in 2008. Lloyds said on June 20 it was making “significant progress” in strengthening its capital position by doing that. European banks are bolstering their finances through asset sales as they try to meet stricter capital rules.
In Australia, the Lloyds International unit reported a loss of A$148.3 million ($135.6 million) in 2012, narrowing from a shortfall of A$1.2 billion the previous year, according to filings with the Australian Securities & Investments Commission. The division reduced assets by 24 percent to A$12.2 billion last year, according to the documents.
London-based Lloyds was already studying the sale of the Capital Finance unit in Australia, which provides retail, equipment and commercial financing services, a person familiar with the matter said July 5. The unit has more than A$6 billion in assets and equity of more than A$2 billion, the person said.
Lynne Machin, a Sydney-based spokeswoman for Lloyds, declined to comment on the planned sale, which was reported by the Wall Street Journal yesterday. Goldman Sachs’s Sydney-based spokeswoman Hayley Morris was not immediately available to comment.
The U.K. government is considering selling as much as 5 billion pounds ($7.7 billion) of Lloyds shares to money managers as soon as in September as a first step to reducing its holding in the lender, two people with knowledge of the plan said July 19.
The government owns about 39 percent of Lloyds, a stake valued at 19.3 billion pounds as of yesterday’s closing price of 69.14 pounds a share, data compiled by Bloomberg show.
To contact the reporters on this story: Narayanan Somasundaram in Sydney at firstname.lastname@example.org; Brett Foley in Melbourne at email@example.com; Paulina Duran in Sydney at firstname.lastname@example.org