Lloyds considering sale of Australian banking units

It’s Lloyds latest bid to strengthen capital position.

Sources said Lloyds Banking Group PLC is exploring the sale of its asset finance unit, Capital Finance, and BOS International, its commercial lending unit.

The bank has sounded out potential suitors and has launched a formal process. Together, both units represent most of Lloyds' Australian operations and have some US$8.7 billion in assets under management.

If both units are sold, Lloyds will be left with a financial markets division that provides services including foreign exchange hedging and interest rate swaps to clients.

Analysts believe Lloyds has a capital gap of some US$3.8 billion. As a result, Lloyds is seeking to sell other non-core assets.

Capital Finance claims to be Australia's largest financier of cars, aircraft and office equipment outside the Big Four banks. It provides commercial loans to governments, public and private companies and individuals, and its total exposure is currently around US$6 billion.