Commerzbank is in deep discussion to negotiation the divestment of the bulk of its Eur5.7 billion or US$7.4 billion interest in British real estate loans. The second biggest financial institution in Germany reported the discussions in its prospectus for capital increase released last Tuesday.

The German bank wants to sell the portfolio to Lone Star, the private equity investor and Wells Fargo, the US bank. This was confirmed by a source familiar with the transaction last month.

Commerzbank is selling off its UK property loans business of its mortgage subsidiary Hypotehekenbank Frankfurt International. The unit was formerly known as Eurohypo and the divestment is a means to cut down its overall exposure in its balance sheet.

All three declined to make any comment on the negotiations or on the reports. According to the Financial Times, the Eurohypo sale is considered as the biggest ever sale of property loans made by a European bank since the financial crisis.