Blueprint
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
23
October 2018
LLOYDS BANKING GROUP
plc
(Translation of registrant's name into
English)
5th Floor
25 Gresham Street
London
EC2V 7HN
United Kingdom
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports
under
cover Form 20-F or Form 40-F.
Form
20-F..X.. Form 40-F
Indicate
by check mark whether the registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes
No ..X..
If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule
12g3-2(b):
82- ________
Index
to Exhibits
Item
No.
1 Regulatory News Service Announcement, dated 23 October
2018
re: Lloyds & Schroders Announce Strategic
Partnership
23 October
2018
LLOYDS AND SCHRODERS ANNOUNCE WEALTH MANAGEMENT STRATEGIC
PARTNERSHIP AND AGREEMENT TO MANAGE £80 BILLION OF
SCOTTISH WIDOWS AND LLOYDS ASSETS
Lloyds Banking Group (Lloyds) and Schroders plc (Schroders) today
announce that they are entering into a strategic partnership to
create a market-leading wealth management proposition.
This strategic partnership will combine Lloyds' significant client
base, multi-channel distribution and digital capabilities with
Schroders' investment and wealth management expertise and
technology capabilities.
For Lloyds, the partnership is in line with the strategic
objectives outlined in its latest strategic review and will
accelerate the development of its Financial Planning and Retirement
business, and deliver significant additional
growth.
For Schroders, the partnership will continue its expansion into the
strategically important UK wealth management market, building on
its core strengths in active investment management. It will also
leverage Benchmark Capital's1 award-winning
adviser platform technology.
This strategic partnership includes:
Financial Planning
●
Lloyds
and Schroders will establish a new financial planning joint venture
company (JV) for affluent customers. Lloyds will own 50.1 per
cent of the share capital and Schroders the remaining 49.9 per
cent. The JV will address the growing gap in the advice market
through a personalised, advice-led proposition, backed by
world-class investment expertise and best in class
technology.
●
Lloyds
will transfer approximately £13 billion of assets and
associated advisers from its existing Wealth Management business to
the JV. There will also be a referral agreement in place to enable
Lloyds' customers to benefit from this enhanced
proposition.
●
The
JV aims to commence activities by the end of H1 2019 (subject to
required regulatory and other approvals) and will be led by a
management team comprising representatives from both partners. From
completion, Antonio Lorenzo, Chief Executive of Scottish Widows and
Group Director of Insurance & Wealth will be Chairman and James
Rainbow, Schroders' Co-Head of UK Intermediary, will be Chief
Executive (both subject to regulatory approval).
●
Lloyds
and Schroders see significant growth opportunities in the financial
planning and retirement market and the JV will aim to become a top
three UK financial planning business within five
years.
High Net Worth Wealth Management
●
In
connection with the transfer of the £13 billion of assets to
the JV and Schroders taking 49.9 per cent of the JV, Lloyds
will receive up to a 19.9 per cent financial investment in the
holding company of Schroders' UK wealth management business
(subject to regulatory approval). This will provide Lloyds' high
net worth customers with access to Cazenove Capital's leading
wealth management propositions.
1
Benchmark
Capital is 77 per cent owned by Schroders.
●
The
partnership will provide Lloyds with the opportunity to offer the
specialist investment management services of Cazenove Capital to
charities and family offices, with which Lloyds has strong
relationships via its Commercial Banking Business.
●
Lloyds
will also transfer approximately £400 million of existing
private client assets under management to the Schroders UK wealth
management business.
Investment Management
●
Schroders
will be appointed as the active investment manager of approximately
£80 billion of the Scottish Widows and Lloyds insurance and
wealth related assets (which includes the £13 billion to
be transferred to the JV and the £400 million to be
transferred to Schroders' UK wealth management business), following
Lloyds' asset management review announced in February 2018. This
appointment will be for at least five years.
●
Lloyds
remains confident in its rights to terminate the current asset
management agreements and expects the arbitration process to
conclude early next year.
●
This
appointment will benefit both Lloyds and its customers through
providing access to a partner with leading investment management
expertise, a stable investment team and strong performance across
multiple asset classes.
●
This
mandate will enhance Schroders' scale in its core areas of
equities, fixed income, multi-asset and private
assets.
●
The
management of £67 billion of Scottish Widows insurance related
assets will commence following conclusion of the current
arbitration process with Standard Life Aberdeen or by no later than
when the existing contract ends in March 2022.
●
The
management of the £13 billion of wealth related assets and the
£400 million of existing private client assets will transfer
to Schroders as soon as possible following the arbitration process,
irrespective of the outcome.
Lloyds and Schroders have also agreed to work together and
potentially develop other strategic opportunities, including
investment propositions and advice for Lloyds' retail customers,
for which Schroders would provide active asset management
services.
Financial details of the overall transaction are set out in the
attached appendix.
António Horta-Osório, Group Chief Executive of Lloyds,
said:
"I am delighted to be announcing this exciting partnership with
Schroders and the creation of a new market leading wealth
management proposition. This provides a strong platform for growth
and is a further step in the delivery of our strategic
objectives."
Peter Harrison, Group Chief Executive of Schroders,
said:
"Wealth management is a strategic priority for Schroders. In
combining our award-winning technology and world-class investment
expertise with Lloyds' significant client base and digital
capabilities, we are creating a strategic partnership which is
exclusively focused on the evolving needs of UK savers and
investors. I am also delighted that we have been entrusted to
manage £80 billion of assets for Lloyds' and Scottish
Widows' clients."
Antonio Lorenzo, Chief Executive of Scottish Widows and Group
Director of Insurance & Wealth, said:
"The unique combination of two of the UK's strongest financial
services businesses will enable us to create a market-leading
proposition which will benefit customers. The aim is to become a
top three UK financial planning business within five years, given
the significant growth opportunities in the financial planning and
retirement market combined with the new company's ambitious medium
term growth strategy."
Appendix
Financial information
Within this transaction, Lloyds Banking Group will contribute
£13 billion of wealth-related assets under management into a
new JV, 49.9 per cent of which will subsequently be
transferred to Schroders. In addition, Lloyds Banking Group will
transfer approximately £400 million of existing private client
assets under management to Schroders' UK wealth management
business.
The aggregated consideration for these two transfers is
approximately £200 million, which will be satisfied through
shares representing up to 19.9 per cent of the holding company
of Schroders' UK wealth management business (Schroder Wealth
Holdings Limited), subject to regulatory approval, and these shares
will be retained by Lloyds subject to customary joint venture exit
provisions.
The combined profit before tax for the JV and the private client
assets being transferred is estimated at c.£35 million for
2018 (c.£130 million income and c.£95 million costs) with
gross assets of c.£120 million.
The acquisition by Schroders of 49.9 per cent of the JV is
subject to a true-up exercise, involving possible deferred
consideration payable in cash, subject to caps, which will be
determined after three years depending on the net new business
performance of the JV.
The transaction is not expected to have a material financial impact
on Lloyds Banking Group in the short term but provides significant
growth opportunities in excess of the existing £50 billion
target for additional Financial Planning and Retirement assets
under administration by 2020.
On completion, Lloyds will recognise its share of profits from its
stake in the JV, and from its investment in Schroder Wealth
Holdings Limited, in Other Income within the Lloyds Banking Group
accounts.
Evercore acted as financial adviser to Lloyds in relation to this
transaction.
- END -
For further information:
Investor Relations
Douglas
Radcliffe +44
(0) 20 7356 1571
Group Investor Relations Director
douglas.radcliffe@lloydsbanking.com
Corporate Affairs
Matt
Smith
+44 (0) 20 7356 3522
Head of Media Relations
matt.smith@lloydsbanking.com
FORWARD LOOKING STATEMENTS
This document contains certain forward looking statements with
respect to the business, strategy, plans and /or results of the
Group and its current goals and expectations relating to its future
financial condition and performance. Statements that are not
historical facts, including statements about the Group's or its
directors' and/or management's beliefs and expectations, are
forward looking statements. By their nature, forward looking
statements involve risk and uncertainty because they relate to
events and depend upon circumstances that will or may occur in the
future. Factors that could cause actual business, strategy,
plans and/or results (including but not limited to the payment of
dividends) to differ materially from forward looking statements
made by the Group or on its behalf include, but are not limited to:
general economic and business conditions in the UK and
internationally; market related trends and developments;
fluctuations in interest rates, inflation, exchange rates, stock
markets and currencies; the ability to access sufficient sources of
capital, liquidity and funding when required; changes to the
Group's credit ratings; the ability to derive cost savings and
other benefits including, but without limitation as a result of any
acquisitions, disposals and other strategic transactions; changing
customer behaviour including consumer spending, saving and
borrowing habits; changes to borrower or counterparty credit
quality; instability in the global financial markets, including
Eurozone instability, instability as a result of the exit by the UK
from the European Union (EU) and the potential for other countries
to exit the EU or the Eurozone and the impact of any
sovereign credit rating downgrade or other sovereign financial
issues; technological changes and risks to the security of IT and
operational infrastructure, systems, data and information
resulting from increased threat of cyber and other
attacks; natural, pandemic and other disasters, adverse weather and
similar contingencies outside the Group's control; inadequate or
failed internal or external processes or systems; acts of war,
other acts of hostility, terrorist acts and responses to those
acts, geopolitical, pandemic or other such events; changes in laws,
regulations, practices and accounting standards or taxation,
including as a result of the exit by the UK from the EU, or a
further possible referendum on Scottish independence; changes to
regulatory capital or liquidity requirements and similar
contingencies outside the Group's control; the policies, decisions
and actions of governmental or regulatory authorities or courts in
the UK, the EU, the US or elsewhere including the implementation
and interpretation of key legislation and regulation together with
any resulting impact on the future structure of the Group; the
ability to attract and retain senior management and other employees
and meet its diversity objectives; actions or omissions by the
Group's directors, management or employees including industrial
action; changes to the Group's post-retirement defined benefit
scheme obligations; the extent of any future impairment charges or
write-downs caused by, but not limited to, depressed asset
valuations, market disruptions and illiquid markets; the value and
effectiveness of any credit protection purchased by the Group; the
inability to hedge certain risks economically; the adequacy of loss
reserves; the actions of competitors, including non-bank financial
services, lending companies and digital innovators and disruptive
technologies; and exposure to regulatory or competition scrutiny,
legal, regulatory or competition proceedings, investigations or
complaints. Please refer to the latest Annual Report on Form 20-F
filed with the US Securities and Exchange Commission for a
discussion of certain factors and risks together with examples of
forward looking statements. Except as required by any applicable
law or regulation, the forward looking statements contained in this
document are made as of today's date, and the Group expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward looking statements contained in
this document to reflect any change in the Group's expectations
with regard thereto or any change in events, conditions or
circumstances on which any such statement is based. The
information, statements and opinions contained in this document do
not constitute a public offer under any applicable law or an offer
to sell any securities or financial instruments or any advice or
recommendation with respect to such securities or financial
instruments.
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
LLOYDS
BANKING GROUP plc
(Registrant)
By: Douglas
Radcliffe
Name: Douglas
Radcliffe
Title: Group
Investor Relations Director
Date: 23
October 2018