SYDNEY, Aug 2 (Reuters) - Britain's Lloyds Banking Group is preparing to exit the Australian market, seeking tosell a leasing unit with a book value of $3.6 billion and a $625million institutional loan portfolio, three sources familiarwith the situation said on Friday.
The part-nationalised bank is aiming to cut itsinternational branches to fewer than 10 countries by 2014 from14 currently to lower costs and strengthen its balance sheet.
Progress in its turnaround plans has meant that Britaincould sell a quarter of its 39 percent stake to institutionalinvestors in the next week, people close to the matter havesaid.
The sale of the A$700 million ($625 million) loan portfolioof Lloyds' Bank of Scotland International unit appears to be thefurthest along. At least five bidders are shortlisted, onesource told Reuters.
National Australia Bank Ltd, Macquarie Group Ltd, private equity giant KKR & Co LP, WestpacBanking Corp and US hedge fund Oaktree Capital Group made it to the second round, with bids due inmid-August, the source added.
"It's a portfolio of loans that are either non-performing ornon-core," a separate source said of the loans up for sale.
The British bank is also selling its motor and equipmentleasing unit Capital Finance, two of the sources said. Sometwo-thirds of Capital Finance's lease business is motor vehiclefinancing and the balance is made up of equipment financing, onesource added.
Goldman Sachs is advising Lloyds on the sales, thesources said.
The sources declined to be named as they were not authorisedto speak on the record. KKR, Lloyds, Macquarie, NAB, Westpac andGoldman declined to comment. Oaktree was not immediatelyavailable for comment.
The Australian Financial Review first reported on theshortlist on Friday.