Lloyds Bank has made a deal to sell its £4bn Irish property book to rival lender, Barclays, a move that compensates for £110m loss reported by the lender.
Barclays, which is acting on behalf of a number of parties such as M&G Prudential, is buying £4bn worth of residential mortgages owned by Lloyds. However, it is understood that Barclays will only hold onto a small portion of the mortgages in the deal, similar to the recent £5bn sale by UK Asset Resolution of its Bradford & Bingley mortgage portfolio.
Gross assets to be transferred come to a grand total of £4.3bn, upon which Lloyds said it had already taken a £300m impairment. Holding the Irish mortgage cost Lloyds approximately £40m last year.
Lloyds has said that this deal will leave the bank with “minimal exposure to Ireland” and “is in line with the group’s strategy of becoming a low-risk, UK-focused bank”.
The deal is expected to complete in the second half of 2018 and the bank reported that the sale proceeds “will be used for general corporate purposes”.
As a result of the news, Lloyds and Barclays shares increased by 0.2% as the markets opened.
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