LONDON - Lloyds Banking Group is on a selling spree.
On Friday, the bank announced that it had agreed to sell a portfolio of United States real estate-backed securities for £3.3 billion ($5 billion) to a number of American investors, including Goldman Sachs. The British firm said it expected to generate a pretax income of £540 million from the deal.
The disposal is part of Lloyds’ mounting efforts to increase it capital reserves after British regulators demanded that the country’s banking sector raise a combined £25 billion to fill a capital shortfall by the end of the year.
By offloading the American mortgage-backed securities, the British bank has benefited from a resurgent American property market, where housing prices in March rose almost 11 percent compared to the same period last year, according to the S.&P. Case-Shiller home price index.
Lloyds said it had sold the portfolio at a 22 percent premium to the combined £2.7 billion value of the securities. The deal is expected to close in the first week of June.
The transaction is the latest in a series of asset sales by the British bank, which is 39 percent owned by local taxpayers after receiving a bailout during the financial crisis.
Earlier this week, Lloyds announced the sale of its private banking unit in Miami to the Spanish firm Banco Sabadell, while the British bank also offloaded its international private banking subsidiary to Union Bancaire Privée for around £100 million
The transactions follow a £450 million share sale in the wealth management firm St. James’s Place last week, the second time that Lloyds has reduced its stake in the company in a bid to boost its capital reserves.
In total, the disposals have pushed the bank’s common equity Tier 1 capital ratio, a measure of a firm’s ability to weather financial shocks, from 8.1 percent in the first quarter of the year to around 8.7 percent, under the accountancy rules known as Basel III. Lloyds has said that it plans to reach a 9 percent ratio by the end of the year.
Shares in the British bank fell less than one percent, to 61.5 pence, in trading in London on Thursday, though the firm’s stock price has risen 143 percent over the last 12 months.
The British government previously has said that it would break even if its sells its stake in Lloyds at around 61 pence a share.
As part of the deal, Lloyds TSB Group Pension Trust also will generate pretax income of £360 million from selling its share of the securities, which have a book value of £805 million. The proceeds will be used to reduce the pension fund’s deficit, according to a company statement.
