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Lloyds readies sale of German insurer: source

A man waits outside the corporate headquarters of Lloyds Banking Group in the City of London August 1, 2013. REUTERS/Andrew Winning
A man waits outside the corporate headquarters of Lloyds Banking Group in the City of London August 1, 2013. REUTERS/Andrew Winning

LONDON (Reuters) - Lloyds Banking Group is readying a sale of its German life insurance business, a source with knowledge of the matter said, as the British state-backed bank exits overseas markets to focus on lending at home.

Lloyds could raise around 400 million euros ($533 million)from the sale of Heidelberger Leben, the source said, with German reinsurer Hannover Re tipped as the most likely buyer.

The government is preparing to start selling its 39 percent stake in Lloyds, acquired as part of a bailout during the 2008 financial crisis, after the shares surged above its breakeven price of 61 pence.

Lloyds' German insurance sale, which the source said could be announced as early as this week, follows the disposals of its $5 billion U.S. mortgage book, Spanish retail banking operations and international private banking business.

The bank has been trying to sell Heidelberger for at least two years but struggled to find a buyer. When the insurer was put up for sale in 2011 it was reported to have an embedded value - an insurance-specific valuation measure - of 1 billion euros.

Lloyds aims to halve its non-core loan book by the end of 2014 from 141 billion at the end of 2011.

Lloyds, Heidelberger and Hannover all declined to comment.

(Reporting by Laura Noonan in London and Alexander Huebner in Frankfurt; Writing by Tommy Wilkes; Editing by Carmel Crimmins and Erica Billingham)

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