Lloyds Banking Group has confirmed that it will sell its motor and equipment asset finance business and other operations to Westpac Banking Corporation.
The group will sell its asset finance arm Capital Finance Australia Limited (CFAL) and corporate lending arm BOS International (Australia) for approximately Au$1.45bn (1bn).
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Lloyds, 40% of which is owned by the UK government, said the sale was part of its strategy to focus on the UK and would allowed to exit Australia while continuing to support Australian clients, and to turn the proceeds to general corporate use.
CFAL comprises a motor vehicle finance book of Au$3.9bn and equipment finance book of Au$2.9bn, with combined receivables of Au$6.8bn, and Westpac expects the deal to provide Au$100m in additional earnings by 2015.
Gail Kelly, Westpac Group chief executive officer, said the sale, funded by the corporation’s own resources "makes both commercial and strategic
sense", and described CFAL and BOSI as "strongly performing businesses that we know well and that will expand our reach and capability in target segments".
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By GlobalData"Importantly", she added "the transaction meets our strict acquisition criteria and shareholders will see a benefit to earnings per share in FY14."
The deal, which follows speculation around several prospective buyers earlier this year, is not subject to regulatory approvals and is expected to be completed on 31 December 2013; however Westpac has notified the Australian Competition and Consumer Commission.
