LLOY Lloyds Banking Group Plc

By Ian Walker

LONDON--Lloyds Banking Group PLC (LLOY.LN) said Thursday it is selling a portfolio of European commercial real estate loans to MELF Sarl, an entity affiliated with Marathon Asset Management LP, for 280 million euros ($389.46 million) as part of its strategy to reduce its non-core run-off portfolio.

The 33%-government-owned bank added that the sale won't have a material effect on the group, including on its capital position, due to existing provisions taken against these assets. It will use the money raised for general corporate purposes.

Lloyds expects the sale to complete in the second quarter of this year.

Shares closed Wednesday at 79 pence, valuing the company at GBP56.49 billion.

Write to Ian Walker at ian.walker@wsj.com

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