Lloyds TSB eyes potential German deal

By Steve Slater and Mathieu Robbins

LONDON (Reuters) - Lloyds TSB would consider a significant acquisition and is looking at a possible deal in Germany, people familiar with the situation said on Saturday.

It is considering deals for Dresdner Bank, owned by insurer Allianz, and Deutsche Postbank, the retail bank at the centre of takeover speculation, one of the sources said.

Lloyds declined to comment on whether it is looking at Dresdner, Postbank or the German operations of U.S. bank Citi, which are also up for sale.

Lloyds Chief Executive Eric Daniels has signalled recently that the bank would consider a deal. It outperforms rivals in its core UK market and a sharp fall in bank valuations has created opportunities.

Lloyds has been in talks with Allianz for weeks over Dresdner, Germany's Der Spiegel reported on Saturday, without citing sources. It said the UK bank had submitted a non-binding bid for Dresdner.

The fragmented German banking industry is in talks that could result in some of the country's biggest names changing hands this year.

Deutsche Postbank is up for sale, Allianz may spin off loss-making Dresdner and Citi plans to sell its retail business.

Dresdner's retail banking business could be worth about 8 billion euros (6 billion pounds). Commerzbank is already in advanced talks about a deal and Spain's Santander is also mulling a move, sources have said.