HSBC is to acquire the onshore banking operations of Lloyds TSB Middle East, in a deal which would reduce the bank's 35-year presence in the region to little more than a private banking business and services for customers with accounts offshore.
Lloyds will sell its retail, commercial and corporate banking businesses and one branch in Dubai, while retaining its regional wealth management arm.†The deal remains subject to regulatory approval.
Parent company Lloyds Banking Group, which is 41 per cent owned by the British government as the result of a government bailout at the height of the financial crisis, announced its intention last summer to exit 15 of the markets in which it operates.
"Lloyds Banking Group has today announced that it has agreed to sell its onshore UAE presence to HSBC," Lloyds said in a statement. "The group has made a commitment to continue to invest in its wealth business in the region to realise its growth potential."
Customers will see no change in operations during this time, said Richard Musty, head of the bank's UAE business.
"Lloyds TSB has a long and successful history in Dubai and we are proud of what we have achieved and the performance of our business locally," he said.
The future of the 233 staff at Lloyds TSB Middle East in Dubai who are affected by the deal was now uncertain.
"The business being acquired from Lloyds has approximately 8,800 personal and commercial customers and a loan book of approximately US$573m as at 31 December 2011," HSBC said in a statement. The total value of Lloyds TSB Middle East's assets changing hands is $769m.
The international banking giant beat a rival offer from Abu Dhabi Commercial Bank, which was being advised by Rothschild. Two other local banks had also made bids for the bank's assets according to people familiar with the matter.