Struggling U.K. bank HBOS plc reported better-than-expected half-year
results on Thursday, including a 56% decline in pretax profits, and
said it was considering "selective asset disposals." It was the first
time HBOS, the nation's biggest mortgage lender, had mentioned the
possibility of disposals since the credit crisis began a year ago.
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Investors bid up HBOS stock 6.6% in Thursday afternoon trading to 289.25 pence, giving the bank a market capitalization of £15 billion ($30 billion).
Analysts and bankers thought the two businesses most likely to be put up for sale were the Australian and the Irish units, which contributed about 10% of group profits. Ian Gordon, a London-based banks analyst at Exane BNP Paribas, said, "They might be tempted to offload the Australian and Irish businesses, which both have heavy loan to deposit ratios, if the price is right. Together, they could be worth up to £4 billion. HBOS is not a forced seller because its capital ratios are fine. But it is exposed to higher wholesale funding costs and it has had to slow growth."
Another analyst cautioned that "HBOS could mean they want to sell businesses, or they might just mean they are looking at ways of disposing of some loan portfolios. It depends on whether buyers come forward offering attractive prices, and also on the rate of deterioration in the broader economy."
Other noncore businesses include HBOS' relatively small businesses outside the U.K., in countries such as the Netherlands, Spain and the U.S. -
Neil Sen
