Lloyds to spin off billions in property assets

Lloyds Banking Group is believed to be considering plans to hive off a portion of its giant commercial property portfolio into a separate, tax-efficient company.

Senior figures within the bank are thought to have put forward the idea, which would see some of the £50bn to £75bn worth of assets and loans inherited by Lloyds following its merger with HBOS spun off into a real estate investment trust (Reit).

Any move would happen after the general election, and with the taxpayer owning 41.3 per cent of the bank, any deal would require the Government to retain a stake in the new property vehicle.

Sources said that the plan to move some of Lloyds' commercial property interests into a separate structure were at an early stage and other options to tackle the bank's troubled commercial property portfolio remain on the table.

"It's a sensible idea but the key will be who they get to manage it and what they put in there," said a source. "It will be much cleaner and will make it easier for Lloyds to sell off assets too."

Last September, Lloyds parachuted in Mark Collins, the former chief operating officer at Land Securities and a one-time adviser to a property fund backed by the Prince of Wales, to help restructure the bank's commercial property book. Mr Collins, who declined to comment on plans to create a Reit, has been working to clear up the property mess left by Peter Cummings, the discredited former head of property lending at HBOS.

Estimates suggest that around 20 per cent of Mr Cummings's deals by value, have turned sour and will not be recovered.

Mr Collins has been managing assets now under the control of the bank as part of the ending of loans that cannot be saved.

Lloyds' chief executive, Eric Daniels, was forced to admit last month that write-downs on assets at the bank rocketed to £24bn in 2009. Mr Daniels said the increase in impairments, which forced Lloyds to post an overall loss of more than £6bn for the year, was "principally due to the HBOS portfolios and their high level of exposure to commercial property".

Mr Daniels and the chairman, Sir Win Bischoff, aim to shrink Lloyds' huge loan book by as much as £200bn in the coming years.

The group raised £22.5bn from its investors in 2009 in the biggest rights issue of the year. However, some city analysts believe that the bank could be forced to raise additional capital if the dreaded "double dip" in markets becomes a reality.

A spokesman for Lloyds said: "We do not comment on speculation."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...