A GBP 250 million loss was taken by Lloyds on its sale of its loss making investment in Spanish banking to Banco Sabadell. With the sale, the British bank lessens the losses and increases its capital base.

Since the 2008 bailout, Lloyds has been carrying a 39% share ownership by the British government. Because of the sale of Sabadell, it would retain 1.8% in the fifth largest bank in Spain. The deal would mean the divestment of the retail and private banking business in Spain, but not the corporate banking operations of Lloyds in the country.

The sale reduces the risk weighted assets thus boosting the bank's capital ratio by 400 million pounds. This is the measure of capital according to a source with knowledge of the transaction that related to Reuters.

Many European banking institutions have been divesting businesses and assets to meet new capital rules from EU regulators. It also is part of the plan of the bank to refocus on Britain as it is the largest retail bank in the country.