Lloyds Banking Group agreed to sell £4.3 billion pounds ($5.8bn) of Irish residential mortgages to Barclays, all but completing the lender’s decade-long exit from the country.
Barclays is likely to bundle the loans and sell them on to other investors, according to a person familiar with the matter, who asked not to be identified because the matter is confidential. The deal is another milestone in Lloyds chief executive Antonio Horta-Osorio’s drive to transform Britain’s biggest mortgage lender into a UK-focused bank.
The transaction will leave Lloyds with “minimal exposure” to Ireland and while the bank will take a pretax loss of about
£10 million on the deal in the second quarter, the disposal should boost its capital buffer, it said in a statement Friday.
Barclays, which paid Lloyds about £4bn for the loans, is likely to securitise the mortgages and sell them on to one or a number of other investors, analysts at Keefe, Bruyette and Woods and Shore Capital said. Barclays spokesman Jon Laycock declined to clarify the bank’s role in the deal or plans for the mortgage portfolio.
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Lloyds has steadily reduced its presence in Ireland after inheriting 32bn euros ($38bn) of assets in the country when it acquired HBOS at the height of the financial crisis in 2008. Many of those loans turned out to be bad and caused Lloyds more then 10 billion euros of losses, according to a UK. government report in 2015.
“This looks to be a very good transaction for Lloyds,” Edward Firth, an analyst at KBW, said in a note to clients. Barclays may opt to “warehouse” the loans in its investment bank before reselling them, he said, but cautioned “the market for non-performing Irish loans is very much a buyer’s one as the domestic banks struggle to achieve European non-performing loan targets".
Last month Barclays played a role in a similar loan portfolio sale, leading a group of investors that bought £5.3bn of mortgages from the UK. government. Pacific Investment Management provided funding for that deal, with Barclays and five other banks committing to buying bonds to help finance the acquisition.
When finalised, the Irish transaction should increase Lloyds’s common equity Tier 1 capital by 25 basis points and leave the bank with about £4bn of loans in run-off mode, less than 1 per cent of its total lending, according to the statement. Lloyds said the deal should be completed in the second half of the year.
Brief scoreline:
Wolves 3
Neves 28', Doherty 37', Jota 45' 2
Arsenal 1
Papastathopoulos 80'
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'Munich: The Edge of War'
Director: Christian Schwochow
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Rating: 3/5
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North Pole stats
Distance covered: 160km
Temperature: -40°C
Weight of equipment: 45kg
Altitude (metres above sea level): 0
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South Pole stats
Distance covered: 130km
Temperature: -50°C
Weight of equipment: 50kg
Altitude (metres above sea level): 3,300
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India (playing XI): Virat Kohli (c), Ajinkya Rahane, Rohit Sharma, Mayank Agarwal, Cheteshwar Pujara, Hanuma Vihari, Ravichandran Ashwin, Ravindra Jadeja, Wriddhiman Saha (wk), Ishant Sharma, Mohammed Shami
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Saturday's schedule at the Abu Dhabi Grand Prix
GP3 race, 12:30pm
Formula 1 final practice, 2pm
Formula 1 qualifying, 5pm
Formula 2 race, 6:40pm
Performance: Sam Smith
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
