Lloyds Banking Group is in the final stages of selling off a package of commercial real estate loans in a deal known as Project Royal, said a source with knowledge of the situation.
The source said the assets could be worth 600-650 million pounds, but declined to comment on a Sunday Times report that Lloyds could book a 400 million pound loss on the deal.
The source said private equity firms Cerberus, Colony Capital and Lone Star were interested in the Project Royal loans, and that a final bidding round was due on November 30.
Lloyds declined to comment on the situation.
Britain ended up with stakes of around 40 percent in Lloyds and 83 percent in Royal Bank of Scotland after bailing out both banks during the 2008 credit crisis, and as a result both banks have been ordered by regulators to sell off assets.
RBS is currently trying to complete the sale of 1.4 billion pounds worth of real estate loans to American buyout firm Blackstone, although the transaction has been complicated by debt-related funding problems.
Thomson Reuters IFR also reported on Friday that a stand-off between cash-strapped European banks and possible buyers of trillions of euros of loans, mortgages and real estate that they are trying to off-load has put pressure on the European Central Bank (ECB) to provide more help.
($1 = 0.6458 British pounds)
(Reporting by Sudip Kar-Gupta; Editing by Helen Massy-Beresford)