(Reuters) -Lloyds Banking Group is to buy out Schroders’ 49.9% stake in their UK wealth joint venture, the companies said on Thursday, as the British bank looks to expand in the so-called ‘mass affluent’ sector.
Under the agreement, Schroders will swap its stake in the joint venture for Lloyds’ 19.1% stake in Cazenove Capital, a separate business that focuses on high net worth customers. No cash is changing hands in the deal.
The wealth venture, which was formed by the two firms in 2019 and has around 17 billion pounds ($22.75 billion) in assets under administration, will be rebranded as Lloyds Wealth.
British banks including HSBC, Barclays and Lloyds are stepping up their efforts to earn more fee income from the ‘mass affluent’, defined previously by Lloyds as customers with deposit balances of between 75,000 pounds to 250,000 pounds.
Big banks have traditionally shunned the mass affluent, leaving them to independent financial advisors such as St James’s Place in favour of going after the super-rich.
“Growing wealth in the UK is core to our purpose,” said Chira Barua, CEO Insurance, Pensions & Investments. Barua said the acquisition of Schroders stake would “offer customers a unified wealth offering bringing the best of human advice, technology and products under one umbrella.”
Schroders said in a statement that it had also reached a multi-year agreement with Lloyds to continue to manage the rebranded business’ customer assets as well as for Lloyds’ Scottish Widows.
($1 = 0.7472 pounds)
(Reporting by Prerna Bedi in Bengaluru and Tommy Reggiori Wilkes in London; Editing by Mrigank Dhaniwala, Elaine Hardcastle)
