U.S. hedge fund Cerberus has bought a 1 billion euro ($1.4 billion) book of commercial real estate loans from Lloyds Banking Group at a 21 percent discount to their nominal value, the UK bank said on Friday.

The sale effectively completes Lloyds' sale of non-core commercial real estate in Europe, as part of a shrinking of its balance sheet and restructuring of the bank since it needed a taxpayer rescue five years ago.

Lloyds said the loans, mainly in the Nordic region, Germany and France, were sold to Promontoria Holding, an affiliate of Cerberus Institutional Partners.They had a nominal value of 1.09 billion pounds ($1.8 billion) and were sold for 1.03 billion euros, or 860 million pounds.

The portfolio generated a 7 million pound loss last year and Lloyds said the deal would have a positive capital impact on the bank. The deal is expected to completed next month. ($1 = 0.6118 British pounds)