Lloyds Banking Group to Sell 20% Stake in St. James’s Place

Lloyds Banking Group Plc (LLOY) will sell a 20 percent stake in its wealth-management unit, St. James’s Place Plc (STJ), as Britain’s biggest mortgage lender seeks to bolster capital.

Lloyds will sell a minimum of 102 million shares in the company, realizing a gain of between 350 million pounds ($522 million) and 400 million pounds, the London-based bank said in a statement today. Lloyds will retain 37 percent of St. James’s Place after the sale.

Lloyds Chief Executive Officer Antonio Horta-Osorio is reducing the bank’s balance sheet to enhance its financial strength after it was bailed out by the U.K. taxpayer during the banking crisis. The so-called non-core division has shrunk 49 percent to 98 billion pounds in the past two years. Lloyds acquired St. James’s Place when it bought HBOS Plc in 2008.

Bank of England Governor Mervyn King said in November U.K. banks may need to increase the capital they hold against potential losses. He asked the Financial Services Authority to investigate which banks might be undercapitalized and report back in March.

The sale will boost Lloyds’s core Tier 1 capital ratio by 20 basis points, Lloyds said. The ratio was 12 percent at the end of 2012.

St. James’s Place, which advises clients with typically more than 100,000 pounds to invest, has more than doubled funds under management over the last five years as economic turmoil and a changing tax burden in the U.K. prompted high earners to look for investment advice. The firm charges annual fees for investing clients’ assets in third-party funds.

St James’s Place shares have risen 54 percent in the last 12 months and increased its dividend by a third to 10.64 pence for last year.

To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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