In an effort to raise capital by selling non-core assets, Lloyds Banking Group is reportedly looking to auction about $8.7 billion of U.S. mortgage securities.
According to a report on 4-traders.com, citing an unnamed source, the firm, which is 39% government-owned, is trying to build up its balance sheet following its bailout at the height of the financial crisis.
At the end of 2012, Lloyds attributed a book value of $4.99 billion to the securities up for auction, according to a report in the Wall Street Journal.
The assets – which have been increasing in value – are reportedly a mixture of risky residential mortgage-backed securities issued prior to the financial crisis. They include Alt-A mortgages, for which borrowers often had to produce little evidence of income or assets.
Lloyds acquired the securities in 2008 when it bought failed U.K. lender HBOS PLC.
The supply rivals multibillion-dollar sales of residential mortgage-backed securities by the Federal Reserve Bank of New York in 2011 and 2012, according to the WSJ report.
The sale is not expected to significantly disrupt the $1 trillion market.