Britain-based Lloyds Banking Group said it would be divesting a group of non-performing Irish retail mortgages in a GBP 257 million or USD 420 million cash deal to Tanager Ltd. Tanager is an affiliated company of Apollo Global Management. At this price, Reuters reported that the offer represented less than half of the nominal value of the home loans.

Lloyds is the largest residential lender in Britain, offering mortgages, retail banking, asset management, pensions, corporate banking, insurance services and treasury services. It is 33% owned by the UK government. Apollo Global Management, meanwhile, is an alternative asset manager. It raises funds, looks for investments in and runs private equity, real estate funds and credit-oriented capital markets.

In a statement, Lloyds said the souring mortgages had cost the lender GBP 33 million in losses last year. The portfolio's gross assets in the year ending December 31 were pegged at GBP 610 million. The deal is part of its plan to reduce its non-core assets. The sale is set to be completed in the first half of next year.

Lloyds said about the sale, "The sale proceeds will be used for general corporate purposes and the transaction, although capital accretive, is not expected to have a material impact on the group, due to existing provisions taken against these assets."

According to a Bloomberg report, Lloyds Chief Executive Officer Antonio Horta-Osorio said two months ago that it was ahead of its schedule of reducing assets that were not considered central to the future of the lender. The report said that in the third quarter, the bank's non-core assets had shrunk by GBP 12.6 billion to GBP 70 billion. Lloyds also said that it will further cut down the unit to GBP 66 billion by the end of this year. The non-core unit includes bad debts, real estate loans as well as a major part of its international operations.