Westpac and Macquarie – last 2 in race for Lloyds

It has been reported that the head office of Lloyds Banking Group is now tossing up between just two bids from Westpac Banking (ASX: WBC) and Macquarie Group (ASX: MQG) for its Australian business.

Lloyds is selling its motor leasing division, Capital Finance, which is valued at around $6 billion, as well as a portfolio of loans, worth a further $2 billion. Whilst sources have stated that Westpac’s and Macquarie’s bids are very close, it is believed that Westpac’s bid may have the preferred status, given that the bank is bidding for the entire package.

Macquarie’s bid is slightly higher than what Westpac’s is believed to be, but its offer excludes certain loans which would mean that the loan book would likely be split between more than one buyer. Lloyds would prefer to sell to just one bidder.

The sale of Lloyds’ Australian business drew attention from some of the market’s largest players, including ANZ (ASX: ANZ), NAB (ASX: NAB) and Commonwealth Bank (ASX: CBA), given the limited growth opportunities in the market.

Foolish takeaway

Whilst Westpac may hold the preferred status, it is too early to count Macquarie out of the race. The bank has missed out on a number of soured loans in the last 18 months and it will be keen to acquire this one.

Although a successful acquisition could give rise to growth opportunities, it remains unlikely that the banks will deliver market beating returns in the long-term based on their current high valuation. Instead, are you interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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