Lloyds Banking Group, which is now 43 per cent owned by the taxpayer, is reported to be considering a sale of its pensions and insurance business Scottish Widows.
The group's new chief executive, Antonio Horta-Osorio, is said to be poised to offload the subsidiary, possibly together with the bank's 60 per cent stake in the wealth manager St James's Place.
Possible buyers of Scottish Widows include the UK insurance company Resolution Group, which owns Friends Provident, the British life arm of the French insurer AXA, and Bupa's health assurance division. Mr Horta-Osorio is expected to unveil the plans as part of his strategy to focus the business on its core banking services, which he will present to investors at the end of June.
Lloyds Banking Group declined to comment yesterday on the rumours. The group – formed during a financial crisis mega-merger between Lloyds TSB and Halifax Bank of Scotland, has been ordered by the European Commission to sell 600 branches and at least 4.6 per cent of the UK personal current account market and 19.2 per cent of its retail mortgage assets, as a condition of the state aid it has received.
Mr Horta-Osorio recently announced plans to accelerate these sales, which include the disposal of Cheltenham & Gloucester, the TSB brand and Intelligent Finance. Scottish Widows would reportedly come with a price tag of between £5bn and £7bn, while the banking group may also sell the fund manager Scottish Widows Investment Partnership (SWIP). Lloyds TSB bought the mutual Scottish Widows in 1999 for about £7bn.
Scottish Widows began life as a mutual in Edinburgh in 1815, but finally demutualised and became part of the Lloyds TSB Marketing Group in March 2000. The subsidiary employs just under 3,500 staff.
Lloyds will update the City on its trading for the first three months of the year in the next couple of weeks. It is also braced for more change when the Independent Commission on Banking reports in September.