The managing director of Lloyds' specialist finance arm is considering a management buyout of its integrated finance unit and Lloyds is mulling options to raise cash, two British papers said in separate reports.
Graeme Shankland - former No 2 to Peter Cummings, the disgraced ex-head of Bank of Scotland Corporate - has already floated the idea of a buyout to the heads of the division and has support from senior members of the team, The Sunday Times said without citing sources.
Lloyds has been expected to sell off the unit, which includes debt and equity stakes in businesses such as restaurant chain Gaucho Grill, but a deal is not expected in the short term because of a drop in values.
Cummings and Shankland led a spending spree at HBOS with many deals struck at the top of the market. The value of the portfolio has fallen to 600 million pounds from 1.4 billion pounds at its height, said the Sunday Times.
Shankland hopes to pick up a portfolio that includes stakes in some of Britain's best known companies at a knockdown rate but any such deal would outrage the bank's shareholders, who had to absorb the division's huge losses last year, the report said.
Lloyds is also considering plans to shore up its finances by converting 6.79 billion pounds in preference shares into common equity, according to the Sunday Telegraph. The plan could allow Lloyds to reduce its participation in the government's asset protection scheme and would form part of a series of proposals submitted to the Treasury to strengthen the bank's capital position, including a rights issue.