Lloyds sounds Latin American retreat

LLOYDS TSB is in talks to sell its Latin American operations to rival HSBC in a deal worth around £500m, the Daily Mail has revealed. Negotiations have been taking place for several weeks. Lloyds was codenamed 'Maradona' after the controversial Argentine former football star, HSBC was codenamed 'White'.

The Lloyds division, mainly concentrated in Brazil, Argentina and Columbia, is expected to make around £8.6m profits this year, 2% of the group total. HSBC particularly covets the largest business in the portfolio, Brazilian consumer lending outfit Losango, which specialises in car loans and store credit. Lloyds has a smaller presence in Ecuador, Guatemala, the Honduras and Paraguay. Bank staff on the ground fear for their jobs. 'People are terrified that HSBC will push through heavy redundancies,' said a Latin American source.

Lloyds, which earlier this year failed in an aggressive bid for Abbey National, wants to tidy up its global operations and concentrate on its core operations. A deal would free capital for expansion in Europe. HSBC is already in Brazil, Argentina and Uruguay. It is keen to expand in Latin America, despite the financial crisis that is engulfing Argentina.

The deal is expected to be formally announced in the middle of this month if all goes well, though full agreement has not yet been reached. 'There is many a slip between cup and lip,' said an observer.

If it does go ahead, it will mark the end of Lloyds' 130-year history in Latin America, an association that has been responsible for some of the bank's hairiest moments. Lloyds was one of the worst-affected banks in the early Eighties Third World debt crisis, though it was brought back from the brink of disaster by former chairman Sir Brian Pitman.

Lloyds TSB and HSBC refused to comment.