By Max Colchester and David Enrich
LONDON--Lloyds Banking Group PLC (LYG) is looking to sell a
chunk of its international wealth-management operations, the latest
in a string of moves by the U.K. lender to whittle down its
business to focus primarily on U.K. retail banking, according to
people familiar with the bank's plans.
Lloyds' private and international wealth business, which is
headquartered out of Switzerland, had 12.6 billion pounds ($19.5
billion) of funds under management at the end of 2012, catering to
rich individuals. The business has offices in several locations
around the globe including Miami, Dubai and Monaco, according to
its website. In recent years, Lloyds has reorganized its wealth
division to refocus on U.K. clients or countries with "Anglophile"
connections, according to the bank's annual report.
Lloyds has been looking in recent months to sell at least a
substantial stake of the business to a top-tier wealth management
company, according to a person familiar with the talks, which are
at an early stage and haven't yet identified a likely buyer. The
deal could resemble Lloyds' offloading last month of a 20% stake in
wealth manager St. James's Place PLC (STJ.LN), this person
said.
Several lenders have looked to rein in their international
wealth businesses in the face of greater regulatory pressure over
money-laundering controls and demands from investors to cut costs.
For instance, last year Royal Bank of Scotland Group PLC (RBS) sold
the Latin American, Caribbean and African private banking arms of
its Coutts wealth management business to Royal Bank of Canada
(RY).
For Lloyds, the move chimes with a wider drive by the bank,
which is 39% owned by the U.K. government, to retrench its business
to its home market. In a bid to improve profitability, Chief
Executive Antonio Horta-Osorio announced in 2011 that Lloyds would
exit over half the 30 countries where it was present.
By the end of 2012, the bank had cut its international presence
by around a one-third, largely by slicing its exposure to Latin
America. On Monday, Lloyds added its retail and private banking
operations in Spain to the list, announcing it was selling the unit
to Banco Sabadell SA (SAB.MC). As part of the sale agreement,
Lloyds will receive shares equivalent to a 1.8% stake in Banco
Sabadell. Lloyds will book a GBP250 million loss on the deal.
As part of the business rethink, Lloyds is also weighing options
for its asset management arm. The British bank has hired Deutsche
Bank AG (DB) to look into selling its asset management unit
Scottish Widows Investment Partnership. So far, the number of
bidders has been trimmed to three, according to a person briefed on
the matter.
The St. James's Place sale is expected to boost Lloyds'
first-quarter results, which will be published Tuesday. The bank is
expected to generate a profit before tax of GBP884 million,
according to analysts at Nomura. For the first time in nearly two
years, the results are expected to be free from charges related to
the wrongful selling of financial products. Analysts will be
looking for guidance on further asset sales and any timing on when
the bank will restart dividend payments.
Write to Max Colchester at max.colchester@wsj.com and David
Enrich at David.Enrich@wsj.com
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