Lloyds Banking Group has made a deal to sell its Spanish retail banking arm in exchange for a 1.8% stake in Spanish bank Banco Sabadell.

Lloyds, which is 39% UK tax payer-owned, failed to sell 632 of its branches to the Co-operative last week.

The deal with Banco Sabadell involves a transfer of £1.5 billion assets including its retail, private banking and investment management business, however Lloyds will retail its corporate banking division. Hit hard by the Spanish recession, Lloyds’ Spanish business made a £43 million loss last year and stands to make a £250 million loss this year from the sale.

The sale is part of a strategy that involves reducing the banking group’s international presence. Lloyds has already left many countries, including Japan and Dubai in the last two years. Read more on this story in the Financial Times.

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