Lloyds Banking Group pays £20m for deal errors

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The taxpayer-backed bank is likely to take a hit of at least £20 million on the £23.3 million sale of a Birmingham business park to property firm Hansteen Holdings, which was announced today.

Sources close to the deal said the former Lloyds TSB put £46 million into the original £58.4 million purchase of Saltley Business Park by property fund Europa Capital and Opus Land at the top of the market in 2007.

But talks over a refinancing broke down last year and Europa Sapphire, the Luxembourg-based company which owned the park, went into receivership before Hansteen stepped in.

Saltley has been hit hard by the recession, with annual rents plunging to £2.35 million from
£4 million before the downturn, and it has a 30% vacancy rate.

Property firms are raising hundreds of millions of pounds to snap up cheap assets coming on to the market from bailed-out banks like Lloyds and RBS.

Irish banks which went on a lending spree in the UK in the boom years are also expected to hang up the "for sale" signs.

Lloyds is also braced for a fresh £2.7 billion hit on its Irish loans last month after a "significant deterioration" in market conditions following the nation's financial rescue.