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UPDATE 1-Lloyds to sell 20 percent stake in St James's Place
March 11, 2013 / 6:11 PM / 5 years ago

UPDATE 1-Lloyds to sell 20 percent stake in St James's Place

* St James’s Place stock up nearly 27 pct this year

* Lloyds to sell at least 102 mln shares

By Kylie MacLellan

LONDON, March 11 (Reuters) - UK lender Lloyds plans to sell 20 percent of wealth manager St James’s Place to focus on core banking and respond to regulatory pressure to strengthen its capital.

The placing of at least 102 million shares would be worth just under 550 million pounds ($820 million) at St James’s Place closing share price on Monday of 536.5 pence.

Such block sales of shares are usually sold at a discount.

Lloyds said it expected the placing to increase the group’s core equity by 500 million pounds and its core capital ratio by about 15 basis points, under the full impact of global capital rules currently being implemented.

“The placing reflects Lloyds’s strategy to simplify the group and focus on its core customer franchise,” it said in a statement.

The bank, which is 39 percent state-owned, acquired the stake as a result of its rescue of HBOS during the financial crisis and has long been rumoured to be considering selling it.

Speculation over a possible disposal was in the past seen by analysts as holding back share performance, leading the wealth manager to say in 2010 that any plans by Lloyds to offload the stake had been shelved for the time being.

Shares in St James’s Place are up 26.8 percent since the start of the year.

Last month St James’s Place, which sells a broad range of financial products including a suite of mutual funds hand-picked from across the industry, raised its dividend by a third and said it planned a similar increase in the coming year.

It has defied the financial crisis with consistent flows of new funds from clients who want to protect nest eggs from the ravages of low interest rates as they near retirement.

Lloyds said that following the placing, expected to be completed either later on Monday or on Tuesday morning, it would hold around 37 percent of St James’s Place and had agreed not to reduce its stake further for at least a year.

The sale is being run by Bank of America Merrill Lynch.

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