Lloyds to sell stake in merged Lloyds-HBOS: Report

British banking major Lloyds TSB, which is to buy out its rival HBOS, is in talks with insurance groups and sovereign wealth funds for sellin
g stake in Lloyds-HBOS, a media report said.

"Lloyds TSB is in talks with sovereign wealth funds and UK insurance groups about selling stakes in a merged Lloyds- HBOS group," The Times said in a report published online today.

According to The Times report a preliminary deal is scheduled to take place by January.

The UK daily noted that Lloyds intends to use the cash to help redeem four billion pounds of expensive and restrictive government preference shares in Lloyds and HBOS at the earliest opportunity. This would allow the bank's board to keep its promise of restarting dividend payments next year.

"It is understood that Lloyds is in negotiations with up to ten Middle Eastern and Asian sovereign wealth funds about selling the stake. Funds from Dubai, Kuwait and Brunei are obvious contenders, as is Temasek of Singapore. Chinese funds, which have made loss-making investments in Western financial institutions including Barclays are not candidates," the report pointed out.

Quoting sources, the report said Lloyds, which is advised by Merrill Lynch, UBS and Citigroup, has been in talks with a number of sovereign funds for more than a month.

"The talks were put on hold as the state-sponsored funds concentrated on a potential investment in Barclays, but are now said to be back on in earnest. The board of Lloyds is understood to be keen to seal a deal by January when Lloyds and HBOS will formally merge to demonstrate confidence in the business," it added.

Source: EconomicTimes