Of Special Interest

29th March 2011

Horta-Osorio determined to conclude Lloyds branches sale this year

The Financial Times reports that new Lloyds Banking chief executive, António Horta-Osório, is determined to conclude a deal for the sale of the branches he is required to dispose of before year end. He is reported to have stipulated that whichever investment banks are appointed as advisers to the deal also offer the buyer bridging finance should it be required. The finance required could exceed £15bn (€17.1bn $24.1bn ¥1,958bn Y158.2bn) according to the report. One of the areas where the bank is required to reduce its exposure is in the mortgage market and the deposits in the branches are significantly less than the mortgage outstandings. Companies such as Virgin Money and NBNK, are known to want the branches and who would be a popular choice as buyers with government and the public. They do not have the balance sheets to be able to fund the mortgages without help[ from some source.


Citigroup, Credit Suisse, JPMorgan, Rothschild and UBS are said to be amongst the banks pitching for the business. Rothschild stand out as the one amongst the group who would not be able to directly offer such finance. The news follows the news that JPM was providing $20bn of term funding for the AT&T proposed acquisition of TMobile USA. This has raised concerns about certain of the top global investment banks getting bigger yet and therefore the possibility of increased systemic risk.


[See Banking Newslink: Implications of JPM's $20bn loan to AT&T
and
Banking Newslink: Lloyds Banking plan to reduce customer complaints ]