Lloyds Banking Group appears to be continuing its efforts to reduce the amount of risk on its balance sheet by contemplating the sale of another portfolio of Irish real estate loans.
Citing sources familiar with the matter, Bloomberg is reporting that the London-based bank is considering the sale of approximately €650 million worth of loans backed by Irish property. It is likely that Lloyds will sell the loans at a discount, which could vary depending upon the level of distress in the portfolio. A spokesman for the banking group declined to comment, stating that Lloyds does not comment on speculation.
If Lloyds does indeed sell this portfolio, the move is in-step with the bank’s ongoing strategy to reduce its exposure to non-core assets— in particular, Irish property loans. In November, it was reported that Lloyds Banking Group sold a portfolio of distressed Irish property loans to Apollo Global Management for £149 million (€185 million; $237 million). At the time of the sale, Lloyds announced that the gross value of the assets backing the loans was £1.4 billion, meaning that the bank sold the portfolio to the New York-based private equity firm at a massive discount.
In 2010, Lloyds began to wind down and close the Irish unit it acquired two years earlier as part of a takeover of HBOS. According to the banking giant’s 2012 annual report, 85.2 percent of its Irish wholesale portfolio is impaired, due primarily to “continued deterioration in the Irish commercial property market.” As of December 31, net exposure in its Ireland wholesale portfolio had been reduced to £5.4 billion, down from £8.6 billion one year prior.