UPDATE: Lloyds Bank Sells Halifax Estate Agency For GBP1

Lloyds Banking Group PLC (LYG), which is 43.5%-owned by the U.K. government, said Friday it has agreed to sell its loss-making Halifax Estate Agencies business to LSL Property Services PLC (LSL.LN) for GBP1 as part of its ongoing strategic review.

The bank said the move won't have a material impact on its accounts. Halifax Agencies include a network of 218 offices and 93 franchise operations.

The Lloyds' Halifax brand isn't included in the sale, and the Halifax Estate Agency will eventually be renamed as one of LSL's existing networks, either as Your Move, Reeds Rains or Intercounty.

"The decision to sell the estate agency business, which has been loss-making for some time, follows a strategic review undertaken by the group which concluded that an estate agency operation is no longer integral to its business model," Lloyds said.

Lloyds, which hit financial problems during the credit crunch when it took over the troubled U.K. lender HBOS, is currently looking at ways of reducing its dependence on the U.K. government and is reported to be drawing up plans that will allow it to avoid having to insure GBP260 billion worth of risky loans and investments through the state-backed asset protection plan.

The LSL deal should be completed in January, when around 1,000 estate agency staff will transferred. Overall, Lloyds expects 360 job losses.

A London-based analyst said the sale was a positive step for the U.K. bank and that, although the disposal has no material impact on Lloyds' earnings forecasts, "the Halifax Estate Agencies unit was loss-making and it is a positive step by Lloyds to dispose of such an asset to strengthen their balance sheet."

David Nicholson, managing director of Halifax Community Bank, said: "Halifax Estate Agency is a well-established business and, following a strategic review, we believe that it is better able to grow outside the group with a strong existing player in the market such as LSL Property Services."

As part of its ongoing restructuring, Lloyds said Thursday it may sell some of its investment management assets, including Bank of Scotland Portfolio Management Services, to Rathbone Brothers PLC (RAT.LN).

At 0727 GMT, Lloyds Bank shares were up 4 pence, or 4.2%, at 95 pence, outperforming the Stoxx Europe 600 banks index, which was up by around 1%. The shares have fallen by 15% over the last year. LSL was up 13 pence, or 5%, at 275 pence.

Company Web site: http://www.lloydsbankinggroup.com

-By Digby Larner, Dow Jones Newswires; +33 1 4017 1748; digby.larner@dowjones.com

(Ishaq Siddiqi contributed to this article.)

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