Lloyds Banking Group plc announces the proposed sale of its International Private Banking business to Union Bancaire Privée (‘UBP’). The Transaction will include the business of the Group’s Geneva-based Private Bank, its branches based in Geneva, Zurich, Monaco and Gibraltar, and its representative office in Montevideo. The agency office in Miami is excluded from the sale because it was has being bough by Banco Sabadell for US $5 billion. In connection with the Transaction the Group will also be closing the Dubai International Finance Centre based private banking business.
The Business offers a wide range of personalised banking, investment and planning services to high net worth individuals and families. UBP has an attractive proposition for the clients of our International Private Banking business and the senior client facing teams of the Business are expected to transfer to UBP on completion of the Transaction. To ensure continued support for our customers and in conjunction with the sale, the Group is also exploring potential business opportunities with UBP including possible client and product referrals.
The Group’s UK-offshore businesses including the Channel Islands, Isle of Man and Gibraltar will not be affected as a result of the Transaction. The Transaction builds on the commitments we made as part of the Group Strategic Review to reduce and simplify our international presence and build our wealth business by focusing on the UK, Channel Islands and the UK Expat marketplace. Going forward, the Group’s wealth strategy is focused on serving mass affluent and affluent customers within the UK and Channel Islands, and those with UK connections.
As of 31 March 2013 the assets under management of the Business were approximately £7.2 billion and the total balance sheet assets were approximately £729 million. The Business reported a loss of approximately £50 million in 2012. The total consideration, payable in cash, for the Transaction is up to approximately £100 million, of which we expect to receive approximately £65 million at closing, with the rest deferred and payable in the two year period following completion of the Transaction, contingent upon the performance of the Business in that period. In addition the total assets figure includes other clients’ assets such as loans and derivative products which will be transferred to UBP at book value. The transaction is expected to result in an overall gain on sale and be capital accretive, although not material from a group perspective. The sale provides further evidence of the significant progress being made in simplifying the Group. The proceeds of the Transaction will be used for general corporate purposes.
The transaction is subject to a number of conditions, including regulatory approval, and is expected to complete in a number of stages, with the majority of the Business expected to transfer in the second half of 2013 and the remainder by the first quarter in 2014.
In addition to this transaction, and in line with its stated objective to reduce its international footprint, the Group has decided, in principle, to withdraw its presence in South Africa.