Struggling Lloyds Banking Group is selling its fund management arm Insight to Bank of New York Mellon (BNYM) in a £235 million deal.
The part-nationalised British bank will receive £200 million in cash and £35 million of BNYM shares for Insight’s institutional investment business, which manages £80 billion for pension schemes, intermediaries and other companies.
However, ahead of the deal, Lloyds will transfer funds from its Halifax and Bank of Scotland bancassurance units, its Bank of Scotland wealth management operation and the Clerical Medical intermediary franchise to its own management operation, Scottish Widows Investment Partnership (SWIP).
This will boost SWIP’s funds under management by £42 billion to £125 billion and give “significant scale benefits", Lloyds says.
The deal will go through in the fourth quarter of the year. Jo Dawson, wealth and international director at Lloyds, says: "As Lloyds Banking Group continues to develop and grow, both in the UK and internationally, it was essential that we undertook a thorough and robust review of our asset management businesses and future plans.
"Both SWIP and Insight are strong and well established asset managers but we believe Insight is better able to focus on developing its specialist external franchise outside the group."
More than 10 potential buyers had put in bids for Insight, which is the UK’s seventh largest asset manager with £122 billion of funds under management. It specialises in liability driven investment solutions, active fixed income and alternatives.
Insight’s pre-tax profit for the six months to the end of June hit £21.3 million, up 31% compared to the same period in 2008.
Lloyds inherited Insight when its shotgun marriage to HBOS was pushed through last September. However, the bank has been plagued by bad debts mainly from HBOS’ loan portfolio since the merger and reported a £4 billion loss for the six months to the end of June.