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Lloyds Banking Group today struck a deal to sell the bulk of its Insight Investment Management arm to Bank of New York Mellon for £235 million as part of a shake-up of its asset management operations.
Lloyds will retain the Insight funds sold to private punters drawn from its Halifax and Bank of Scotland businesses from, for example, its own branches and its Clerical Medical intermediary division.
These funds, totalling about £42 billion, will transfer from Insight's Old Broad Street offices in the City to Edinburgh, where they will be run under the Scottish Widows Investment Partnership umbrella.
The rest, totalling some £80 billion of instituional money drawn from pension schemes, local authorities and other big institutional investors, will transfer to Bank of New York Mellon. Insight counts Marks & Spencer, Rentokil Initial and Cumbria County Council among its clients.
About 500 staff currently work at Insight. While most will transfer either to Bank of New York Mellon or Edinburgh, talks have started with staff representatives over some job losses.
Mellon won an auction for the insitutional fund management business beating bids from Schroders, Northern Trust and private equity firm Hellman & Friedman.
Insight chief executive Abdallah Nauphal attempted to put together a management buy-out for the business but was also keen that it was not swallowed up by a much larger fund manager.
Lloyds shares, which had fallen by 12% since weekend reports that it may seek to raise up to £15 billion in a rights issue, rose 3p to 94p.
A Lloyds spokesman said today's deal was not connected to speculation over the bank's need to raise money and was entirely to do with the long-term strategic plan for the bank's asset management operations.
Jo Dawson, the bank's wealth and international director, said: “We believe Insight is better able to focus on developing its specialist external franchise outside the group.”
