Lloyds Bank has engaged the services of advisers as to the possible sale of its asset management arm, Scottish Widows. This is in preparation that a regulatory demand to raise more capital would be issued shortly.

Further disposals of UK bank assets have been underway as the Bank of England has issued a notice that banks need to raise GBP25 billion or US$38 billion in extra capitalization in order to absorb future loan issues.

Many analysts the exposure of Lloyds Banking Group Plc in the UK housing market has been the focal point of loss as prices declined in many parts of the country. It is also one of the banks facing a shortfall as its capital has been affected by the cost of paying compensatory damages for misselling to clients projected at around GBP3 billion.

The bank has hired Deutsche Bank to provide advisory services on the possible sale. The bank stressed that a formal sale process had not yet commenced and the insurance business of Scottish Widows is not up for sale.