Lloyds Said to Be in Talks to Hire Irish Regulator Elderfield

Lloyds Banking Group Plc, Britain’s biggest mortgage lender, is in talks to hire Irish Central Bank Deputy Governor Matthew Elderfield, said a person with knowledge of the matter.

Elderfield, who said last week he will step down from the central bank in six months’ time, is poised to take up a senior post in compliance at Lloyds, said the person, who asked not to be identified because the appointment hasn’t been made public. Elderfield, 47, declined to comment, as did officials at London-based Lloyds and the Irish central bank in Dublin.

Irish Central Bank Governor Patrick Honohan hired Elderfield in 2010 to help oversee the reconstruction of the country’s banking system after the real estate bubble burst. Elderfield had served as chief executive officer of the Bermuda Monetary Authority between 2007 and 2009 and previously spent eight years at the U.K.’s Financial Services Authority.

Lloyds has racked up 12.1 billion pounds ($18.5 billion) of loan losses in Ireland since its 2008 takeover of HBOS Plc, whose precursor Bank of Scotland Plc entered the Irish mortgage market in 1999. Lloyds injected about 8 billion euros ($10.5 billion) of capital into the Irish unit between 2008 and 2010, when it let its local banking license lapse and subsumed the loans into the London-based parent. Royal Bank of Scotland Plc has put 14.3 billion pounds into its Dublin-based Ulster Bank division since 2009.

Elderfield, who receives a 340,000-euro annual salary at the central bank, led two rounds of stress tests of Ireland’s domestic lenders, requiring taxpayers to commit as much as 64 billion euros of capital to banks. On his watch, the state took over five of the six biggest lenders, which are still grappling with the legacy of the crisis.

About 25 percent of all Irish mortgages were in arrears at the end of last year or have been restructured. Irish home prices have halved since their peak in 2007, according to the country’s statistics office.

Before it's here, it's on the Bloomberg Terminal.