* TPG and Goldman Sachs in advanced talks for loans -sources
* Loans likely to sell at steep discount to face value
By Simon Meads and Matt Scuffham
LONDON, Aug 10 Lloyds Banking Group is
in advanced talks to sell a 1.2 billion pound ($1.9 billion)
portfolio of loans, people familiar with the situation said, as
the group continues to shed assets following its bailout nearly
four years ago.
A consortium of U.S. private equity firm TPG and a
division of investment bank Goldman Sachs are in
exclusive talks to buy the portfolio, which includes real estate
and business loans that were largely made by HBOS before it was
taken over by Lloyds, two people said.
Lloyds, which is 40 percent owned by the British government,
is looking to reduce its loan book, cut costs and rein in bad
debt as part of a recovery plan instigated by Chief Executive
Antonio Horta-Osorio to restore the bank to health.
TPG and Goldman beat a handful of other bidders for the
so-called Project Lundy portfolio, which is likely to see Lloyds
sell the assets at a steep discount to face value, one of the
Lloyds recently sold another 500 million pound portfolio of
loans to Sankaty Advisors, the debt affiliate of Bain Capital,
as part of its move to shed bad loans.
Lloyds is not alone in wanting to shrink its loan book. Many
banks across Europe, including state-controlled rival Royal Bank
of Scotland, have been selling off assets as they
attempt to shore up their capital positions.
Specialist private equity groups have been at the front of
the queue to buy those loans, seeing an opportunity to make
large profits from buying such assets at a fraction of their
Lloyds and TPG declined to comment, Goldman Sachs was
unavailable to comment.