CompaniesMay 31 2013

Lloyds sells US mortgage book for £3.3bn

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Lloyds Banking Group has agreed the sale of its US residential mortgage-backed securities portfolio to a number of different institutions for a cash consideration of £3.3bn.

The transaction is part of the group’s continued efforts to boost its capital reserves through the sale of non-core assets.

The assets subject to the transaction have a book value of approximately £2.7bn and, as a result of the transaction, the group will realise a pre-tax gain on sale of approximately £540m.

As part of the same transaction the Lloyds TSB Group Pension Trust (No. 1) Limited also sold its share of the portfolio of US mortgage securities with a book value of £805m, realising a pre-tax gain on sale of £360m. This gain will be used to reduce the deficit in the scheme.

Lloyds said in a statement the sale is expected to increase the group’s common equity tier 1 capital ratio by approximately 0.47 per cent, equivalent to arounf £1.4bn, and increase the group’s core tier 1 capital ratio under current capital rules by around 0.33 per cent, or £950m.

The transaction is expected to complete in the first week of June.

Last week the bank confirmed the sale of a further 77m of its shares in advisory firm St James’s Place, in a placing that was expected to net approximately £450m. The move followed the earlier sale of a 102m shares in March in a placing worth approximately £400m.

Yesterday (30 May) the bank announced that it had sold its international private banking operations in Geneva, Zurich, Monaco and Gibraltar, as well as its representative office in Montevideo and agency office in Miami, in separate transactions worth more than £100m.