Five questions answered on the sale of Lloyds’ Spanish division

The company has not been doing well of late.

Lloyds banking group has announced it is selling its Spanish retail division to Spanish Bank business Banco Sabadell. We answer five questions on the deal.

How much has Lloyds sold its Spanish division for?

It has sold its Spanish retail banking business to Banco Sabadell for 1.8 per cent stake in the Spanish bank, which it will hold for at least two years. The deal also includes the transfer of £1.5bn of assets, such as retail mortgages and deposits. However, its corporate banking division wasn’t included in the sale.

Lloyds said the stake is worth about 84m euros ($110m; £72m). As a result of the sale the bank will make a £250m loss it said.

Banco Sabadell may also be required to pay a further £17m over the next five years, dependent on the profitability of the mortgage business.

Why is Lloyds selling off the Spanish part of its business?

Lloyds said the sale was part of its plan to reduce its international presence.

According to Reuters, Lloyds is cutting its presence from around 30 countries and has already sold operations in 12 countries over the last two years. The company wants to be in less than 15 countries by 2014.

It has also been trying to sell branches in the UK, as is required by European regulators as part of the government take over deal.

How big is Lloyds’ Spanish division?

It has total assets of £1.52 bn, which consist mainly of retail mortgages and deposits, plus 28 offices and a local investment management business.

It lost 43 million euros last year.

How well is the Spanish Bank Banco Sabadell doing?

Shares in the bank were 1.58 euros this morning, after they shed 30 per cent since August last year.

How well has Lloyds been doing of late? 

The 39 per cent state owned bank has faced billions of pounds of losses recently in countries such as Ireland and Australia.

It was also dealt a blow last week when the Co-operative group pulled out of a deal to buy more than 600 branches of Lloyds. The bank is now planning to sell the branches as a stand-alone bank through stock market listing.

Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

Photo: Getty
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Who will win in Manchester Gorton?

Will Labour lose in Manchester Gorton?

The death of Gerald Kaufman will trigger a by-election in his Manchester Gorton seat, which has been Labour-held since 1935.

Coming so soon after the disappointing results in Copeland – where the seat was lost to the Tories – and Stoke – where the party lost vote share – some overly excitable commentators are talking up the possibility of an upset in the Manchester seat.

But Gorton is very different to Stoke-on-Trent and to Copeland. The Labour lead is 56 points, compared to 16.5 points in Stoke-on-Trent and 6.5 points in Copeland. (As I’ve written before and will doubtless write again, it’s much more instructive to talk about vote share rather than vote numbers in British elections. Most of the country tends to vote in the same way even if they vote at different volumes.)

That 47 per cent of the seat's residents come from a non-white background and that the Labour party holds every council seat in the constituency only adds to the party's strong position here. 

But that doesn’t mean that there is no interest to be had in the contest at all. That the seat voted heavily to remain in the European Union – around 65 per cent according to Chris Hanretty’s estimates – will provide a glimmer of hope to the Liberal Democrats that they can finish a strong second, as they did consistently from 1992 to 2010, before slumping to fifth in 2015.

How they do in second place will inform how jittery Labour MPs with smaller majorities and a history of Liberal Democrat activity are about Labour’s embrace of Brexit.

They also have a narrow chance of becoming competitive should Labour’s selection turn acrimonious. The seat has been in special measures since 2004, which means the selection will be run by the party’s national executive committee, though several local candidates are tipped to run, with Afzal Khan,  a local MEP, and Julie Reid, a local councillor, both expected to run for the vacant seats.

It’s highly unlikely but if the selection occurs in a way that irritates the local party or provokes serious local in-fighting, you can just about see how the Liberal Democrats give everyone a surprise. But it’s about as likely as the United States men landing on Mars any time soon – plausible, but far-fetched. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.