BANK of Scotland owner Lloyds Banking Group has disposed of its German life assurance unit and sold a £283 million leveraged loan portfolio, leaving it closer to filling an £8.6 billion capital hole identified by regulators earlier this year.
A joint venture between private equity firm Cinven Partners and insurer Hannover Rück paid £250m for the Heidelberger Lebensversicherung business bought by HBOS in 2005.
ELQ Investors II, a subsidiary of investment bank Goldman Sachs, acquired the leveraged loan book for £254m, with another £2m payable within six months if financial conditions are met.
The portfolio is predominantly loans to UK manufacturers and retailers.
The two sales announced yesterday will generate £500m in capital which combined with first half profits, a dividend from Edinburgh-based Scottish Widows and other sales such as Sainsbury Bank means Lloyds has closed £7.2bn of its capital shortfall with second half earnings and further sales still to come.
Heidelberger Leben provides pensions, investment and life assurance products and will be used by its purchasers as a platform for further acquisitions in Germany. Its senior managers will remain in post.
It will also continue to service Lloyds's Clerical Medical policies in Germany and Austria under a long-term administration agreement. That business has proved troublesome for Lloyds which has put £400m aside in provisions for mis-selling.
While Lloyds retains an office in Frankfurt, the Heidelberger Leben deal further reduces its international presence as it seeks to focus on the UK.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article