LONDON (Alliance News) - Lloyds Banking Group PLC Thursday said it has agreed to sell a portfolio of Irish commercial loans to a trio of investors for about GBP827 million, with the group's remaining exposure to commercial assets in Ireland to be minimal following the deal.
The consortium of investors buying the loans consists of US-based alternative investment manager CarVal Investors, Wall Street giant Goldman Sachs, and Bank of Ireland.
"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, UK-focused bank," Lloyds said in a statement.
Lloyds said it's selling GBP2.6 billion in gross assets, with GBP2.3 billion of that amount considered to be impaired. In 2014, the loans generated a GBP130 million pretax loss.
Bank of Ireland said it will acquire a portfolio of about EUR200 million of performing commercial loans made to about 650 customers under the deal, with entities affiliated with CarVal and Goldman to acquire the rest of the portfolio.
The sale proceeds will boost Lloyds' capital levels by about seven basis points, according to the FTSE 100 bank, with the proceeds to be used for general corporate purposes.
At the end of June, the group's impaired loans as a percentage of closing advances were 2.7%, and provisions as a percentage of impaired loans were 55.1%.
"On a pro-forma basis, the impact of this sale would be to reduce the impaired loans as a percentage of closing advances to 2.2% and reduce provisions as a percentage of impaired loans to 48.3%," Lloyds said.
Mark Cunningham, director of Bank of Ireland Business Banking said: "Bank of Ireland is pleased to have been able to avail of this opportunity to demonstrate our ongoing focus on further growing and developing our strong position in serving the business banking sector in Ireland."
Lloyds expects the deal to complete in the fourth quarter.
Lloyds shares were up 0.4% at 85.90 pence on Thursday morning in London. Bank of Ireland shares were trading unchanged in London at EUR0.375.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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