Mar 12 2013
Lloyds Banking Group was sitting on a £400 million windfall following the sale of a 20% stake in wealth manager St James's Place.
The disposal by the taxpayer-backed bank will boost its capital position at a time when regulators are preparing to publish a report on the health of Britain's financial institutions.
With shares in St James's Place near to a record high, Lloyds took the opportunity to reduce its holding in the company to 37% by placing shares with institutional investors last night.
The placing is due to complete on Friday and with gross proceeds of £520 million from the sale of 101.7 million shares at a price of 510p it will realise a gain of around £400 million for Lloyds.
The move will increase its core Tier 1 capital position by £600 million, equivalent to around 0.2%.
St James's Place was set up in 1991 under the name J Rothschild Assurance and joined the stock market in 1997 following a reverse takeover of St James's Place Capital.
HBOS, which was acquired by Lloyds in 2009, secured a 60% stake in the business in June 2000.
The wealth manager has around 140,000 customers and is listed in the FTSE 250 Index with around £35 billion of client funds under management.
Lloyds said the stake reduction was part of its strategy to simplify the group and focus on its core customer franchise. It will continue to have representation on the St James's Place board but will no longer consolidate the company's results into its accounts.
The banking group said: "Lloyds continues to be supportive of the St James's Place management team, which will remain unchanged as a result of the placing."