* Sale increases core tier 1 capital by 685 mln stg
* 109 million shares sold at 630 pence per share
* Sale may boost hopes of dividend resumption
* Lloyds shares up 0.7 pct; St James's up 0.5 pct
By Matt Scuffham
LONDON, Dec 10 Lloyds Bank boosted its
capital by 685 million pounds ($1.1 billion) via the sale of its
remaining stake in wealth manager St James's Place,
raising hopes it can soon pay dividends again for the first time
since its 2008 bailout.
The lender, 33 percent owned by the British government which
put up 20.5 billion pounds to save it from collapse, said on
Tuesday it had sold around 109 million shares in St James's
Place to financial institutions at 630 pence per share.
Gross proceeds, excluding costs and expenses, were 680
million pounds and the bank said it would make a profit on the
sale of 105 million pounds.
Lloyds needs to plug an 8.6 billon pound shortfall
identified by Britain's financial regulator in June before it
can persuade the regulator to allow to pay dividends again, and
is currently selling non-core assets to strengthen its balance
sheet and focus on lending to UK households and businesses.
It has also reduced its loan book, cut costs and reined in
bad debts, helping its shares to more than treble in value over
the past two years and enabling the government to start
offloading its stake in the bank.
"We see no controversy at all with the (widely anticipated)
resumption of cash dividends at 2013 full-year results in
February," said Investec analyst Ian Gordon.
Lloyds also said on Tuesday that the sale of its 21 percent
stake in St James's Place would increase its common equity Tier
1 capital by about 24 basis points under full Basel III capital
rules. Its core tier 1 ratio - a gauge of a bank's financial
strength - stood at 9.9 percent at the end of the third quarter.
Lloyds is targeting a core tier 1 ratio of above 10 percent by
the end of 2013.
Lloyds has taken a number of steps to bolster its capital,
selling businesses and loans that are not deemed to fit with its
long-term strategy. It has also cut back on the countries in
which it operates and expects to be in less than 10 by the end
of 2014 compared with 30 two years ago.
Lloyds previously sold a 20 percent stake in St James's
Place in March and a further 15 percent in May. Last month it
sold its fund management arm Scottish Widows to Aberdeen Asset
Management. The bank is also planning a stock market
flotation of more than 600 branches which have been rebranded
TSB which it must sell to satisfy EU state aid rules.
Meanwhile, the bank's sale of non-core loan portfolios has
gathered pace in recent weeks. Last week, it sold a portfolio of
Irish home loans to U.S. private equity firm Apollo for
257 million pounds and last month it sold a 1 billion euro book
of euro-zone commercial real estate loans to U.S. hedge fund
Shares in Lloyds were up 0.7 percent to 78.8 pence at 1040
GMT, with St James's Place shares up 0.5 percent to 647 pence.
St James's Place reported a recorded level of funds under
management in October, boosted by buoyant markets and a surge in
inflows as investor confidence returned. The sale means it will
become full independent for the first time since Halifax bought
a 60 percent stake 13 years ago.