Part-nationalised bank Lloyds is eying a deal with the UK's largest listed housing landlord Grainger aimed at restoring the value of Lloyds' housing portfolio which got hit by the credit crisis.
A Lloyds spokesman said that Grainger had been picked as Lloyds' preferred supplier for its "residential property asset management platform."
The likely deal between the two companies will see Grainger manage a portfolio of homes on behalf of administrators for housing groups that had been backed by Lloyds.
The government has stakes of around 41 per cent in Lloyds and 83 per cent in rival Royal Bank of Scotland after it had to bail out both banks with taxpayers' money during the credit crisis.
As a result of the state bailout, European regulators ordered Lloyds and RBS to sell off a host of assets.
City A.M. Reporter