Ameriprise lines up 800 million bid for Lloyds funds arm -paper

LONDON (Reuters) - U.S. financial services company Ameriprise Financial <AMP.N> is lining up an 800 million pound bid for Lloyds Banking Group's <LLOY.L> Scottish Widows asset management arm, the Sunday Times reported.

Last week Reuters reported that Lloyds had hired advisors for a possible sale of Scottish Widows Investment Partnership (SWIP), as it prepares for a likely regulatory demand to raise more capital.

The Sunday Times said analysts believe Minneapolis, Minnesota-based Ameriprise, which owns British fund firm Threadneedle Investments, would lay off most of SWIP's Edinburgh-based employees if it wins the auction.

Both Ameriprise and Lloyds declined to comment.

UK banks are having to consider further disposals after the Bank said they must raise a total of 25 billion pounds of extra capital by the end of the year, to be in a position to absorb future loan losses.

($1 = 0.6554 British pounds)

(Reporting by Laurence Fletcher; Additional reporting by Matt Scuffham in London and Jessica Toonkel in New York; Editing by Erica Billingham)