Rathbones to acquire £1.27bn of Lloyds funds for £35.4m

Rathbones has agreed to acquire up to £1.27bn in private client funds from Lloyds Banking Group for a cash consideration expected to be about £35.4m.

In addition to the acquisition of the discretionary funds, Rathbones has also entered into an exclusive distribution agreement with the banking giant.

It will see Lloyds TSB and Bank of Scotland Private Banking clients with investable assets of up to £2m, who require a discretionary investment management portfolio service, referred to Rathbones.

The transaction will be effected through Rathbone Brothers' principal subsidiary Rathbone Investment Management.

Rathbones will pay 3.4% for the £493m of funds under management from Lloyds TSB Private Banking, as at 31 August, which represents approximately 2,000 clients.

It will pay 2.4% of the £775m funds from the Bank of Scotland Portfolio Management Service, which constitutes about 4,000 clients.

Should all of the acquired funds transfer to Rathbones on its own terms of business, the total cost to the group will be £35.4m, paid in cash.

If fully transferred, Rathbones' funds under management will increase by 11.8% to £12bn.

Rathbone Brothers chief executive Andy Pomfret says the acquisition is an attractive opportunity to increase Rathbones' funds under management.

"The clients concerned are used to a very similar service to our own and can be confident that our reputation for investment management and personal service, and our stability, will provide them with a high-quality alternative," he says.

"In addition, we are excited about the opportunity to work with Lloyds Banking Group under an exclusive distribution agreement to provide our core services to those Lloyds Banking Group clients who wish to have a discretionary investment management service with significant assets in direct investments."