Lloyds Banking Group plc (LLOY.L, LYG) announced Friday that it has agreed the sale of its Irish residential mortgage portfolio to Barclays Bank plc (BARC.L, BCS), for a cash consideration of around 4 billion pounds at current exchange rates. The sale will generate a pre-tax loss on sale of about 110 million pounds, recognised in the first half results.
The transaction will also generate approximately 25 basis points of CET1 capital upon completion, slightly better than originally expected, and will complete in the second half of 2018. Lloyds Banking said the gross assets subject to the transaction are around 4.3 billion pounds, of which 0.3 billion pounds are impaired, and in the year to 31 December 2017 generated a pre-tax loss of around 40 million pounds.
Lloyds Banking said the sale is in line with its strategy of becoming a low risk, UK focused bank.
Following the transaction, the company will have minimal exposure to Ireland and the total outstanding run-off portfolio will be around 4 billion pounds, less than 1 percent of the Group's loans and advances to customers.
The sale proceeds will be used for general corporate purposes.