Lloyds Banking Group Plc (LLOY), Britain’s biggest mortgage lender, plans to sell a 493 million-pound ($741 million) stake in wealth manager St. James’s Place Plc (STJ) as it tries to plug a capital shortfall identified by regulators.
The sale of 77 million shares will reduce Lloyds’s holding in St. James’s Place to about 21 percent from 36 percent, the London-based bank said in a statement today. The sale comes less than two months after Lloyds sold 102 million shares in St. James’s Place for 510 pence apiece, raising 520 million pounds.
The bank said today it will seek to raise additional capital required by the Prudential Regulation Authority by shrinking its balance sheet and selling assets rather than tapping shareholders. Lloyds acquired the wealth manager as part of its purchase of HBOS Plc in 2008, a transaction that forced the bank to seek a 20 billion-pound bailout that left the government owning 39 percent of the lender.
Today’s disposal will boost Lloyds’s core Tier 1 capital ratio, a measure of financial strength, by 16 basis points, or about 500 million pounds, to about 8.26 percent. The bank is seeking to increase that to more than 9 percent by the year-end.
Lloyds advanced 2.3 percent to 62.96 pence in London trading. The stock has gained 31 percent this year and is trading above the 61 pence price at which the government says it will break even on its stake.
Bank of America Corp. is managing the share sale and is taking orders for the stock through a so-called accelerated bookbuild. The price for the shares will be set at the end of that process, Lloyds said in the statement.
St. James’s Place, which typically advises clients with 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.
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