Lloyds expected to sell HBOS Investments

Lloyds Banking Group is preparing to launch a mega sale of stakes held by recent takeover target Halifax Bank of Scotland in some of Britain's best-known companies, reports said today.

Shareholdings in more than 60 firms including cinema chain Vue Entertainment, gym group David Lloyd Leisure and D&D Restaurants, founded by Sir Terence Conran, are reportedly being lined-up for sale by Lloyds.

The part-nationalised bank has drafted in investment UBS to look at a potential sale of some or all of the investments, which were accumulated by HBOS for around £1.4 billion, according to The Sunday Telegraph.

Lloyds is 43% owned by the taxpayer and is eyeing disposals to bolster its balance sheet after its rescue takeover of HBOS hit the group hard and landed it with hefty bad debts.

The bank is expected to launch an auction within months and may choose to sell assets individually or as a whole.

But it is not thought that Lloyds will rush into a firesale of the HBOS investment portfolio, which has already reportedly seen its value plunge to about £600 million amid the recession.

HBOS backed a number of companies before its demise, also becoming very active in as an investor in commercial and residential property – an exposure that contributed to its near-collapse last year.

Lloyds has faced mounting criticism from shareholders for its decision to buy-up troubled HBOS and last week announced that chairman Sir Victor Blank, the public face of the takeover, was quitting.

It also revealed only days ago that it may be forced to sell off parts of the business as the price of turning to the Government for financial support.

The European Commission could compel the bank to divest or exit core businesses as a condition of granting state aid approval, Lloyds said.

Lloyds must gain European approval for its business plan after taking part in last autumn's recapitalisation and credit guarantee scheme, as well as placing £260 billion of toxic debts into the taxpayer-backed Asset Protection Scheme.

The bank declined to comment on plans for a sale of HBOS investments.