Lloyds Banking Group Plc agreed to sell souring commercial loans in Ireland to a group of buyers including Goldman Sachs Group Inc. for about 827 million pounds ($1.3 billion).
Goldman Sachs, CarVal Investors LLC and Bank of Ireland Plc are buying loans with a face value of 2.6 billion pounds, of which 2.3 billion pounds are impaired, Lloyds said in a statement Thursday. The sale will increase the London-based bank’s capital by about 0.07 percentage points, it said.
“The sale is in line with the group’s strategy of deleveraging its balance sheet by reducing run-off assets and creating a low-risk, U.K.-focused bank,” Lloyds said in the statement.
Lloyds has been extricating itself from Ireland since 2010, when it handed back its local banking license and started to sell off debt. The lender cut its gross Irish loans by about half last year to 7.89 billion pounds, according to its annual report.
Royal Bank of Scotland Group Plc’s Ulster Bank unit is also reducing debt in Ireland. Net assets held in the lender’s internal bad bank fell to 1 billion pounds in June from 4.8 billion pounds when the unit was set up in 2014. Ulster said today that first-half operating profit more than doubled as it released money previously set aside to absorb bad loans.
The Lloyds debt sale announced Thursday may cut impaired loans for the group to 2.2 percent of advances to customers at the end of June from 2.7 percent, the bank said. Some 2.9 percent of Lloyd’s loans were impaired at the end of December. The loans generated pretax losses of about 130 million pounds last year.