Funds News

Lloyds to keep St James's Place stake

LONDON (Reuters) - Wealth manager St James’s Place said its majority shareholder Lloyds Banking Group has shelved plans to dispose of its stake ending months of uncertainty that depressed the shares.

A pedestrian passes the head office of the Lloyds Banking Group in central London August 5, 2009. REUTERS/Stefan Wermuth

Speculation over a possible disposal of Lloyds' LLOY.L 60 percent holding as part of broader asset sales was seen by analysts as holding back share performance and the announcement came as both St James's SJP.L and rival Rathbone Brothers RAT.L posted first-half earnings at the top end of market expectations.

By 9:04 a.m., St James's Place shares were up 4.02 percent at 266.7 pence, while the FTSE 250 .FTMC nudged 0.03 percent higher.

“The directors recognise that there has been growing uncertainty over the intentions of our majority shareholder ... Lloyds has indicated that it has no intention to sell down or dispose of its stake in St. James’s Place at this time,” the company said in a statement.

St James’s beat analyst expectations with a 60 percent jump in operating earnings to reach 162.1 million pounds in the first six months, while Rathbones was at the top end of market estimates with a 17 percent jump in underlying pretax profit to 18.1 million pounds.

And in a sign that wealthy clients avoided skittishness in the face of volatile markets through May and June, St James’s Place said sales beat analysts’ forecasts as total new business on an annualised premium equivalent (APE) basis was 292.3 million pounds in the first half, up 44 percent on 2009.

Analysts at Numis Securities had forecast an APE for the first half of 270 million pounds. APE is St James’s most closely watched measure of new business, a combination of regular and single premiums.

The group posted a net inflow of funds under management of 1.5 billion pounds over the period, a 50 percent increase on a year earlier and cited by the firm as evidence investors had not been in rush to revert to cash.

Total funds under management stood at 22.4 billion pounds and the company also announced a 10 percent increase in its dividend to 2.025 pence per share.

Rathbones continued to attract new clients amid falling equity markets during the latter part of the period and total net organic growth of funds -- excluding the impact of markets -- was 4 percent. This represented a slight deceleration from 6 percent growth in 2009 which the company attributed to clients taking cash out of portfolios to supplement their income.

Total funds under management at Rathbones stood at 13.3 billion pounds, up 1.5 percent over the six-month period.

However, low interest rates caused a 60 percent drop in net interest income at the firm from the same period last year.

Rathbones maintained its interim dividend at 16 pence per share. Rathbones shares were trading 0.24 percent higher at 832 pence.

Reporting by Chris Vellacott; Editing by Sharon Lindores For the Funds Hub blog: For Global Investing: here