HSBC is buying gross assets valued at $769 million (484 million pounds) at the end of 2011 and is expected to complete the deal in the second half of this year.
U.K.-based Lloyds, which is in the process of reducing its international presence, said the impact of the sale on its accounts was not expected to be material.
HSBC is acquiring a business with approximately 8,800 personal and commercial customers and a loan book of around $573 million. The deal excludes Lloyds' other private and expatriate off-shore operations based in the UAE.
Acquisition opportunities in this region are scarce, and this is an important opportunity that we have seized, Simon Cooper, regional chief executive of HSBC Bank Middle East, told a media conference call.
Continue Reading Below
He declined to give a value for the deal, which is subject to regulatory clearance. He denied HSBC was looking to buy Royal Bank of Scotland's
Lloyds, 40 percent owned by the British government after a state bailout during the 2008 credit crisis, is shrinking to halve its international presence and cut 15,000 jobs.
HSBC's largest operations in the Middle East and North Africa region are based in the UAE. The bank has a presence in 14 countries across the region, which made a profit before tax of $1.49 billion in 2011.
The Lloyds transaction will give HSBC a branch in the upmarket Jumeirah neighbourhood of Dubai and a service centre in the Arabian Ranches area.
(Reporting by Mirna Sleiman and Amran Abocar; Editing by Sitaraman Shankar and Erica Billingham)