Lehman Brothers, Dresdner Kleinwort Wasserstein and Fuji Bank are providing a £1.5bn (€2.38bn) loan to support Morgan Grenfell Private Equity's buy-out of Whitbread's pub estate.

The three banks are providing the 10-year loan on the understanding that the new UK pub company will refinance much of the loan in the securitised bond market, providing them with a large slug of underwriting fees. Lehman, the lead arranger, DrKW and Fuji will likely syndicate the loan to only a handful of banks, said an official close to the deal.