Lloyds Banking Group (LON:LLOY) has inked a deal to offload its Irish residential mortgage portfolio to Barclays (LON:BARC), the bailed-out lender has said. The company is set to land about £4 billion in cash from the deal.
Lloyds’ share price has been little changed in London in today’s session, having added 0.02 percent to 66.24p as of 09:45 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index having slipped marginally into the red and currently standing 0.17 percent lower at 7,775.10 points. The group’s shares have lost a little over seven percent of their value over the past year, as compared with about a 4.5-percent gain in the Footsie.
Irish mortgage portfolio sales
Lloyds announced in a statement this morning that it had agreed the sale of its Irish residential mortgage portfolio to Barclays, for a cash consideration of around £4 billion at current exchange rates. The deal is expected to generate approximately 25 basis points of CET1 capital upon completion, slightly better than originally expected, and will complete in the second half the year. The transaction, however, will also result in a pre-tax loss on sale of £110 million, recognised in the first half results.
Lloyds explained that the deal was part of its strategy of becoming a low risk, UK-focused bank and following the sale, the company will have minimal exposure to Ireland and the total outstanding run-off portfolio will be around £4 billion, less than one percent of the lender’s loans.
Analysts on Lloyds
Shore Capital reaffirmed the bailed-out lender as a ‘buy’ today, while Credit Suisse continues to see the company as an ‘outperform’. According to MarketBeat, Lloyds currently has a consensus ‘hold’ rating and an average price target of 75.45p. Last month, ShoreCap flagged ‘significant returns’ at Lloyds.