Lloyds cost savings target around $1.6bn

The sources, who declined to be named, also said Lloyds is on course for an early exit from the Bank of England's special liquidity scheme (SLS), set up in 2008 to give emergency funding to the banking sector during the credit crisis.

Chief Executive Antonio Horta-Osorio will present Lloyds' strategy review on June 30. The sources said the 1 billion pound figure was a likely target that had not yet been finalised and added it was not yet decided whether Horta-Osorio would address the bank's exit from the SLS in his speech.

Horta-Osorio told British politicians this month that the review would be "evolutionary rather than revolutionary".

He added Lloyds planned to continue with its "multi-brand" strategy and that he aimed to "revitalise" the Halifax bank, which Lloyds inherited after its 2008 takeover of HBOS during the credit crisis.

However, he also told parliament's Treasury Select Committee that Lloyds still faced major challenges and that it could take up to five years for a full recovery in its fortunes.

Despite Horta-Osorio's implications that Lloyds will not undergo a major shake-up, many analysts still expect it to push on with plans to sell non-core assets, which would help raise cash to shore up its balance sheet.

Analysts will also seek an update on its plans to sell more than 600 retail bank branches, which could net some 3 billion pounds.

Virgin Money, new bank venture NBNK and National Australia Bank UK are likely bidders, while there has been speculation that the assets may also draw interest from European or Asian banks.

The branch sale was forced upon Lloyds by European regulators as payback for being bailed out by British taxpayers during the crisis, just as rival Royal Bank of Scotland was ordered to dispose of assets after RBS's taxpayer rescue.

Lloyds has already sold a host of non-core assets as it looks to simplify its business, and there has been speculation it could exit more small-scale overseas units, having last year sold its Ecuadorian operation for $25 million.

Lloyds' restructuring plans has sparked speculation it may cut thousands more jobs. The group has shed 27,000 jobs over the last two years following its takeover of HBOS.

Britain owns around 41 percent of Lloyds and 83 percent of RBS after bailing out both banks during the financial crisis.

Copyright Reuters, 2011