Lloyds Raises £3.3bn From U.S. Mortgage Portfolio Sale


LONDON -- Lloyds Banking Group this morning announced the latest disposal in its continued "non-core asset reduction," in the form of selling a portfolio of US residential mortgage-backed securities to a number of different institutions for a cash consideration of £3.3 billion.

With a book value of £2.7 billion, the transaction will gift Lloyds around £540 million prior to tax, which will be reinvested into the company for "general corporate purposes."

As part of the sale, Lloyds' pension trust also sold its £805 million (book value) share of the portfolio, to realize a pre-tax gain of £360 million. Management said that this will go toward reducing the deficit in the scheme.

Representing further reduction in its risk-weighted assets, this morning's statement from the 39%-taxpayer-owned bank claimed that the sale will lift the group's core tier 1 capital by around 47 points (£1.4 billion capital equivalent).

Today's news follows last week's disposal of 77 million shares in St. James's Place for £450 million, while Lloyds also reassured investors by saying that it is unlikely to need to raise further funds from shareholders, instead using cash generated from its business and disposals like today's to raise capital needed to absorb future losses on loans.

The share price was little moved in early trade, and still hovers close to its 24-month high of 63 pence. But if you are looking for alternative investment opportunities within the FTSE 100, then this exclusive wealth report reviews five particularly attractive possibilities.

All five opportunities offer a mix of robust prospects, illustrious histories and dependable dividends, and have just been declared by the Fool as "5 Shares You Can Retire On"!

Just click here for the exclusive free report, but don't delay, as all Fool reports are available for a limited time only.

The article Lloyds Raises £3.3bn From U.S. Mortgage Portfolio Sale originally appeared on Fool.com.

Sam does not own shares in any of the companies mentioned. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.