Lloyds TSB mulls buyback of £1bn shares

Lloyds Tsb may buy back shares worth £1bn to boost investor confidence, following the sale of its New Zealand subsidiary for A$4.92bn (£2.25bn).

The sale of National Bank of New Zealand, to Australia and New Zealand Banking Group, marks the completion of Lloyds' plan to shed its foreign businesses, which do not form part of its core strategy.

Under Eric Daniels, the new chief executive, the bank has sold its Brazilian operations to rival HSBC for about £490m this month, and earlier this year sold its French fund management and private banking businesses to UBS.

The deals have left Lloyds with no foreign assets apart from a small presence in Latin America, transforming the bank into a lending, savings and investments group focused on the UK market.

The bank embarked on its overseas acquisition trail under its former chief, Sir Brian Pitman. His successor, Peter Ellwood, made a major European deal one of his objectives, but said, when he stood down earlier this year, that the time was not right to merge with a major bank on the Continent.

Mr Daniels, who ran the bank's retail business before taking the chief executive's seat, has said Lloyds would focus on improving its offering in personal financial services.

"The sale of NBNZ continues the process of managing the group's business portfolio to focus on our core franchise," Mr Daniels said.

Lloyds' shares ticked up 3.5p to 414p, even though ANZ is paying less than some analysts predicted at the onset of the auction for NBNZ, which was put under review by Lloyds in June. Lloyds said earlier this month that it did not have to sell assets to boost its capital, raising expectations that it would return cash from the New Zealand deal to shareholders.

The bank said it would book a profit after tax of £1.1bn from the NBNZ sale.

For ANZ, the deal will catapult it into the leading position in the country's banking sector.

ANZ said NBNZ, one of New Zealand's top two banks with a market share of about 22 per cent, would pay Lloyds a NZ$575m (UK£206m) dividend before the deal is completed.