Rathbone looking at Lloyds buy

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The Independent Online

Lloyds Banking Group yesterday confirmed talks with wealth manager Rathbone Brothers over the potential sale of its Scottish private client fund management operations.

The funds likely to be transferred would be just under £1 billion, with a price set to be in the tens of millions.

While analysts would probably class it in terms of a tidying up exercise, the cash raised would still likely go towards the pot the bank is trying to build to keep it out of the Government's asset protection scheme, which would cost it in the region of £26bn. Uncertainty still surrounds Lloyds' prospects of getting away with a cash call from City investors, which would provide the bulk of the capital it needs to win approval from the Financial Services Authority for keeping out of the scheme. It also needs Government approval.

For Rathbone, a deal with Lloyds is more important, given that it would give it access to a large number of new Scottish clients, which it could push through its network of offices.

Rathbone charges high fees to clients for overseeing their funds on a "discretionary" basis, meaning that a manager decides what to do with the money based on a client's risk profile. Both companies were at pains to stress that there was "no certainty that a transaction will be forthcoming" from the discussions.