Bidders emerge as Lloyds mulls Scottish Widows sale

AMERIPRISE Financial, a New York-based giant with a stock market value of nearly £10 billion, is weighing up an £800 million bid for Scottish Widows Investment Partnership (Swip).

Dean Buckley is currently managing director of Swip. Picture: Complimentary

The US suitor is already the parent group of another well-known City fund manager, Threadneedle Investments, a business similar in scale to Swip.

It emerged late last week that Lloyds Banking Group is considering the sale of Edinburgh-based Swip after privately deciding the business is possibly non-core to the part-taxpayer-owned bank’s future. A sale could be used to build up the bank’s capital buffers.

Lloyds has hired investment bankers at Deutsche Bank to assess appetite in the market to snap up the Scottish asset manager, and it is believed that it has already received informal and preliminary telephone approaches. Ameriprise is believed to be one of the early leaders, industry sources said.

Other possible bidders include fellow American financial major BlackRock and Legal & General, already one of the UK’s biggest asset managers.

Some City fund management analysts believe that, if Ameriprise did win an auction for Swip, it would lay off a sizeable slice of the business’s 500 staff, the vast majority of whom are based in the Scottish capital.

Similar “delayering” exercises occurred in previous foreign takeovers of British fund management names in the past two decades. These included Chase Manhattan’s £4.8bn takeover of Robert Fleming; Swiss Bank Corporation’s £860m swoop on Warburgs; Merrill Lynch’s £3bn acquisition of Mercury Asset Management and Société Générale’s £738m purchase of Hambros.

Swip made a profit before tax of £108m in 2012. It has funds under management of £147bn.

It is understood that the wider Scottish Widows life assurance business is not part of any sale plans.

Swip declined to comment yesterday. Ameriprise Financial was unavailable for comment.

Lloyds paid £7.3bn for Scottish Widows, including the insurance and fund management businesses, in 2007.

But the bank’s chief executive, Antonio Horta-Osorio, has been slimming down the business, which is near-40 per cent owned by the British taxpayer, in order to shrink its balance sheet. The latter became bloated after the disastrous acquisition of HBOS in 2008 led to the bank being bailed out.

Lloyds, and taxpayer-owned Royal Bank of Scotland, were two of the main lenders that the Bank of England (BoE) had in mind when it warned last month that high street banks needed to find a further £25bn to cover a “black hole” in the sector’s capital cushions.

Horta-Osorio also announced last month that Lloyds is to sell a 20 per cent stake in successful City wealth manager St James’s Place.

One analyst commented yesterday: “I don’t think there will be any shortage of interest in Swip. It is big enough to make a sizeable change to someone’s asset management businesses.

“And it does look the way this has leaked out that Horta-Osorio really does not see asset management as something he wants to persevere with in the reshaped banking world.”

l Lloyds is also reportedly considering the sale of Menzies Hotels – which has three sites in Scotland – an asset it inherited as part of its acquisition of HBOS.