Lloyds deal may lead to Scottish Widows sell-off
The £12bn (€15bn) merger of UK mortgage lender HBOS with its larger rival Lloyds TSB, announced last week, may lead to the sale of Lloyds' insurance subsidiary Scottish Widows, according to analysts at UBS.
The analysts, Alastair Ryan and Ross Curran, said in a note yesterday they viewed the deal positively - raising their price target by 50p and their overall rating of Lloyds' shares from 'sell' to 'neutral'.
They expect the combined bank's greater market share to help it generate a better return for shareholders, and are looking for the share price to break 300p. Lloyds shares closed down 3.8% today, or 10.8p, at 275p.
The analysts added that potential disposals following the merger could include the two banks' insurance businesses, Scottish Widows and Clerical Medical. Scottish Widows also includes the fund manager Scottish Widows Investment Partnership, or Swip.
Spokespeople at Lloyds TSB and Scottish Widows both declined to comment, saying it was "too early to say" what the outcome of the merger would be.
--write to mcobley@efinancialnews.com
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