By Max Colchester
LONDON--Lloyds Banking Group PLC (LYG) Monday said it will sell
a 20% stake in St James's Place PLC (STJ.LN), as the lender looks
to cash in on the wealth-management group's recent share rally and
bolster its capital base.
The part-government-owned bank, which currently controls 57% of
St James's Place, said it hopes to gain between GBP350 million to
GBP400 million from the sale. The proceeds of the sale will be used
for "general corporate purposes," Lloyds said.
The move comes just weeks before the Bank of England is set to
outline the scale a multi-billion pound capital shortfall for U.K.
lenders. A spokesman for Lloyds said that the sale of the stake in
the wealth manager was spurred by an uptick in the share price of
St James's Place over recent months and had nothing to do with the
Bank of England's review. In the past year, St James's Place shares
have risen around 52% to GBP5.35.
Bank of America Merrill Lynch (BAC) will take orders for the 102
million ordinary shares being sold. The pricing should be made
public by Tuesday morning. Once the sale is complete, Lloyds will
be left with a 37% stake in the wealth manager. The bank said that
it won't sell any remaining part of its stake in St James's Place
for at least a year. In a statement, St James's Place said that it
would continue to maintain a strong relationship with Lloyds.
The deal should boost Lloyds' common Tier 1 equity--a core
measure of the bank's health-- by around GBP500 million, the bank
said. The move comes as several British banks look to shore up
their capital positions in the face of growing regulatory pressure.
Royal Bank of Scotland Group PLC (RBS) is currently working to
further shrink its investment bank. Barclays PLC (BCS) has recently
issued convertible debt to boost its "loss absorbing capital"--or
the money banks have to burn through before facing collapse.
Lloyds said the sale would allow it to refocus on its U.K.
retail business while simplifying its group structure.
-Write to Max Colchester at max.colchester@wsj.com