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Lloyds Banking Group

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Lloyds Banking Group has drafted in heavyweight City advisers to draw up secret plans for an auction of its shareholdings in some of Britain's best-known companies.

The stakes in more than 60 businesses, including D&D Restaurants, which was founded by Sir Terence Conran, and Vue Entertainment, the cinema chain, were accumulated by executives at HBOS at a total cost of about £1.3bn. Lloyds has appointed UBS, the investment bank, to assess a sale of some or all of the stakes, the value of which have now been written down to about £600m as the economy has hit the buffers.

People close to the process said last night that UBS's work on the integrated finance portfolio, where HBOS was a major lender as well as a principal equity investor, was likely to lead to a sale process beginning in July but insisted that there was no pressure to dispose of assets and that there would not be a firesale.

Lloyds, which is 43pc-owned by the taxpayer, has already received a number of expressions of interest in parts of the portfolio from financial investors. The bank will consider selling the assets individually, in packages or as a whole, but analysts expect that it will be able to recoup only a fraction of what it paid out.

The auction process underlines the extent to which HBOS invested across the economy at the top of the market. Among the other shareholdings which are now likely to be sold are investments in Keepmoat, the social housing provider, Polypipe, a manufacturer of piping systems, Sunseeker, the yacht-builder, and Premex Group, a medical outsourcing specialist.

HBOS's vast exposure to the British residential and commercial property sectors was among the primary reasons for its near-collapse last year, when it had to be rescued by the Government with billions of pounds of taxpayers' money.

Lloyds' emergency takeover of HBOS, the path to which was smoothed by the intervention of Gordon Brown, the Prime Minister, has since cost Sir Victor Blank, the Lloyds chairman, his job. Sir Victor will step down before next year's annual meeting, and a search for his replacement is underway.

Many of the larger real estate investments made by HBOS, including McCarthy & Stone, the retirement home builder, and Crest Nicholson are not part of the integrated finance arm, and do not form part of the review being overseen by UBS. The HBOS investments were made under the aegis of Peter Cummings, the bank's former head of corporate lending, who left earlier this year.

Analysts expect other parts of the group, which is by far Britain's largest mortgage lender, to be put up for sale. A review of Lloyds' insurance operations, which includes Clerical Medical and Scottish Widows, is being handled by advisers at Deutsche Bank.

Eric Daniels, Lloyds' chief executive, has signalled that he is open to disposals but only if he can secure attractive prices. Mr Daniels' position is regarded as safe in the short term after UK Financial Investments, the body which manages the taxpayer's stake in the bank, publicly expressed its support for him last week.

Lloyds declined to comment.

I spent £2000 worth of my BKIR profits to buy LLOY @ 68p

Anyone have any idea how this sell-off will/could affect the share price?

Should I be worried :unsure:

Edited by Hawk

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I spent £2000 worth of my BKIR profits to buy LLOY @ 68p

Anyone have any idea how this sell-off will/could affect the share price?

Should I be worried :unsure:

Heh heh. "Secret" plans all over the torygraph - yeah, right.

It says these assets have been written down from £1.3b to £600m - a little over 50% - meaning they've already taken the hit on them - as indeed they said earlier this year. If they can secure sales while the market is tending to optimism (like, now) they could make a profit on the written-down price.

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Nothing really matters to bank shares apart from the threat of NATIONALISATION.

Lloyds is a risky proposition right now - the share is still in a bear market. It's looking severely overbought on the weekly chart and I've set my target to 20p.

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