HBOS announces PFI stakes sale

HBOS has announced that it has moved £434 million of stakes in PFI projects off its balance sheet and into an infrastructure fund.

Under the terms of the new move, the holdings will be backed by four pension funds – with HBOS holding a 50.1 per cent stake.

This deal streamlines the bank''s balance sheet, ahead of its anticipated £12 billion merger with Lloyds TSB next month.

Lloyds shareholders have already approved the deal – with HBOS investors predicted to follow suit later this week.

Executives at both mortgage lenders want the deal to go ahead, as the financial downturn continues to batter UK financial firms and the credit crunch leads to new business becoming more limited.

Figures from banks show that new mortgage approvals have dropped by 50 per cent over the last year – as house prices have dropped by 15 per cent annually.

The merger is to see the creation of the UK''s biggest mortgage lender – although Lloyds said last week that all firms will maintain their branding on the high street.