Speculation that Lloyds may sell Scottish Widows

by Richard Kilner

Story link: Speculation that Lloyds may sell Scottish Widows

Lloyds Banking Group is coming under renewed pressure to shed its Scottish Widows subsidiary, the Scotsman has reported.

According to Barclays Capital analysts Lloyds Banking Group could stand to see up to £18bn wiped off of its balance sheets by new banking regulations (Basel III).

The firm could even end up some £3.6bn short of new regulatory capital requirements should the new regulations come through in 2012, as planned.

Because Scottish Widows would have to handle £5.8bn of Lloyds’ life assurance business on its own, it would make financial sense for the banking giant to offload the subsidiary, even at a loss of up to £2bn.

This would not be the first time Lloyds Banking Group, created when troubled bank HBOS merged with Lloyds TSB, has had to shed some weight.

In November last year the EU formally approved a 4 year plan to split the TSB, Cheltenham & Gloucester and Intelligent Finance brands from Lloyds Banking Group, which would see it lose some 600 TSB branches and 4.6% of the UK current account market.