Lloyds to sell ship loan book in parcels - sources

Lloyds Banking Group is unlikely to sell its $10 billion (6 billion pound) portfolio of shipping loans to a single buyer and aims to parcel up loans for sale as European banks continue to retreat from the maritime sector, industry sources say.

Lloyds, 41 percent owned by the government, has held talks in the past year to sell its shipping finance book but not reached any deal. A single deal is now unlikely, but the bank is looking to sell blocks of the loans to single buyers, ship industry and banking sources told Reuters.

"They are trying to parcel it off and sell it in bits," a senior ship industry source said.

Shipping companies, especially in the oil tanker and dry bulk sectors, hit by weak earnings and an oversupply of vessels ordered in the good times, are facing a growing funding squeeze as banks pull back from heavy industry sectors as the euro zone debt crisis deepens.

Royal Bank of Scotland has a shipping loan book almost twice the size of Lloyds. About 35 percent of RBS's shipping loans, or some $6.9 billion, has been put in its "non-core" portfolio, which are up for sale or will be run down, a source familiar with the matter said.