The move shows the ailing property market continues to weigh on Lloyds Banking Group, formed from the rescue takeover of Halifax Bank of Scotland by Lloyds TSB agreed in 2008.
It had looked like Uberior Ventures was recovering when it posted a £5.2m pre-tax profit in 2010, having recorded £1.2bn losses the previous two years. But accounts obtained by The Herald from Companies House show in the 2011 calendar year Uberior Ventures recorded a £3.8m loss.
Uberior saw income plunge from £12m to £7.9m last year. It also took an impairment of £21m in debt securities it holds taking its total provision for impairment to £358.6m.
The directors said in their report to the accounts: "During 2011 the company's intermediary parent company, Bank of Scotland plc, agreed to unconditionally and irrevocably release the company from its obligations to repay the sum of £968,009,812 in respect of the bank overdraft position held by the company."
Uberior continued to be viewed by its directors as a going concern due to its support by Lloyds Banking Group.
Lloyds, 40% state-owned after its bailout during the financial crisis, has been keen to reduce its balance and exposure to risky assets. This is reflected on the balance sheet of Uberior Ventures, whose assets plunged from £359.8m to £168.7m during the year due to a combination of impairments and disposals.
Uberior disposed of its Uberior Jersey and Quill Securities subsidiaries during the year.
Among Uberior's interests is a 47.35% in Moncrieffe Holdings, a joint venture with Highland & Universal Investments, the investment vehicle of Sir Brian Souter and Ann Gloag. Moncrieffe Holdings is in liquidation.
During the credit boom, Uberior built up a portfolio of investments ranging from a stake in the Ocean Terminal shopping centre and waterfront in Leith to the Mint Hotels chain. Both have since been sold.
A Lloyds spokesman said: "The overdraft amount reflects losses to investments taken in previous years that have been retained on the company's balance sheet. Releasing the company from its obligations to repay the overdraft does not create any new or additional losses for Lloyds."
