As banks keep shrinking, private equity keeps growing.
A subsidiary of Bain Capital, the private equity firm Mitt Romney helped found, has agreed to buy a portfolio of loans from Lloyd Banking Group, one of the largest banks in in the U.K., the New York Times reports.
The sale is part of an effort by Lloyds to shed some businesses as it seeks to become more financially stable, the Times notes. The UK government still has about a 40 percent stake in Lloyds, after bailing out the bank during the financial crisis. Lloyds is selling a portfolio of leveraged credit -- a grab bag of corporate and real estate loans -- worth around $793 million, according to the Times.
The news comes just a day after Bank of America similarly unloaded some of its own debt business onto the private equity world, selling its Irish credit card unit to the private equity giant Apollo Global Management. Last August, Bank of America sold its Spanish credit card business to Apollo as well, giving the private equity firm more than 1.3 billion Euros in credit-card receivables in those two countries.
It's all part of a broader effort by private equity firms to capitalize on opportunities opened up as the banking sector retreats. The result is that PE firms are increasingly venturing into areas of the financial world that they haven't traditionally operated in -- like consumer credit cards. As Apollo's Senior Managing Director Marc Rowan told a financial conference in New York, he wants Apollo to "be the new bank," according to Bloomberg News.
"These [private equity shops] are highly ambidextrous investment firms," David Snow, founder and CEO of Privcap, a private-equity news and analysis company, told The Huffington Post. "They started as Mitt Romney and three guys and a secretary and have become multinational players that can react to any kind of financial opportunity they see."
Snow added that many private equity firms with a presence in Europe are "licking their chops for what they expect will be a tremendous amount of assets being thrown off by European banks. This is the kind of moment that P.E. firms crave."