Lloyds Said to Drop Sale of $540 Million of Dubai World Debt

Jul 03, 2014 8:18 pm ET

July 3 (Bloomberg) -- Lloyds Banking Group Plc, one of Dubai World’s largest creditors, dropped a plan to sell its loans to the company after offers fell short of the reserve price, according to three people with knowledge of the matter.

The U.K. bank decided to keep $540 million of its loans to the Dubai-based company following an auction today, said the people, who asked not to be identified because they weren’t authorized to speak publicly.

Lloyds, Britain’s biggest mortgage lender, resigned from the committee that represented creditors during Dubai World’s $24.9 billion debt restructuring earlier this year, the people said. Royal Bank of Scotland Group Plc, the U.K.’s largest government-owned lender, has also left the panel, they added.

Lloyds is among several British banks to offload their operations in Dubai following the financial crisis in 2008 and the emirate’s near-default the following year. The London-based lender sold its Dubai branch to HSBC Holdings Plc in 2012 and closed its private banking business in the emirate a year later. RBS sold its consumer-banking assets in the United Arab Emirates to Abu Dhabi Commercial Bank PJSC in 2010.

Officials at Dubai World, Lloyds and RBS declined to comment on the auction and the committee talks.

Dubai World’s debt is split between a $4.4 billion loan due to be repaid in September 2015, and a $10.3 billion loan due in September 2018. The government-owned company hired Blackstone Group LP to advise on managing its debt and to review possible asset sales.

Dubai World repaid $300 million of debt ahead of schedule at the end of June, Reuters reported today.

--With assistance from Arif Sharif in Dubai.