Lloyds Banking Group, Britain's biggest mortgage lender, has sold around a fifth of its wealth management business for just over £500m as the state-controlled lender continues to pare down its business and focus on domestic retail banking.

Lloyds placed around 101m shares in St. James's Place plc at a price of £5.10 each, the company said in a statement published Tuesday on its website, for total proceeds of around £520m. Adjusting for the fair value of the shares on Lloyds books, the total cash earned from the sale will be around £400m, the bank said.

Lloyds will keep around 37 percent of St. James's following the close of the sale on 15 March. St. James's shares closed at 536.5 pence each Monday.

"The Placing reflects Lloyds' strategy to simplify the Group and focus on its core customer franchise," Lloyds said in an earlier statement.

The bank will use the proceeds to boost its so-called tier one capital buffer, the amount of cash a financial insitution needs to set aside to protect savers and investors from potential losses, by around £600m.

Lloyds posted a bigger than expected loss last year after setting aside billions to compensate customers who were mis-sold payment protection insurance and said the government could be getting close to selling some of its 39 percent stake.

The bank said its full-year statutory loss was £570m after setting aside £3.575bn - including £1.5bn in the final three months of the year - to settle potential payment protection insurance claims. The 2011 loss was £3.5bn. Underlying profit, however, tripled from £638m to £2.607m, the bank said. A further £400m was set aside for small business customers who were mis-sold interest rate swap agreements.

LLoyds shares closed at 50 pence each Monday after falling around 0.14 percent on the session. The government's 39 percent holding, which cost around £20bn in 2008, is measured at an average price of 73.6 pence.