Lloyds Banking Group, the lender bailed out by the UK government, is to close its offices in Dubai as part of a $150m deal to sell its international private banking operations to Swiss wealth manager Union Bancaire Privee (UBP).
UBP is buying Lloyds Banking Group’s international private banking arm, as the British lender focuses on its domestic market in the UK.
Lloyds, 39 percent-owned by British taxpayers and under pressure from UK lawmakers and regulators to slim down and focus on lending to British households and businesses, said the sale fitted its strategy to simplify its business.
In a statement, Lloyds confirmed said it will “be closing the Dubai International Finance Centre based private banking business” as part of the deal, which is worth in the region of around £100m ($151m).
Lloyds TSB Private Banking has been based in the Dubai International Financial Centre (DIFC) since 2005. A spokesperson from the bank was unable to comment on the time line for the closing of the office, how many staff would be affected or the contingency plan in place for its clients.
“UBP has an attractive proposition for the clients of our international private banking business and the senior client facing teams of the business are expected to transfer to UBP on completion of the transaction,” the statement by Lloyds said.
“To ensure continued support for our customers and in conjunction with the sale, the group is also exploring potential business opportunities with UBP including possible client and product referrals,” it added.
The international business being sold has assets under management of £7.2bn, 500 staff and branches in Geneva, Zurich, Monaco and Gibraltar. The bank’s private banking operations in Britain were not included in the sale.
Lloyds said it would receive £100m for the business, comprising an initial £65m followed by a further £35m depending on performance in the next two years.
Lloyds also said on Wednesday it would also sell its private banking business in Miami to Spain’s Banco Sabadell.
Lloyds has been looking to sell assets to boost capital and last week raised £450m from the sale of a 15 percent stake in wealth manager St James Place.
Lloyds was rescued by a £20.5bn government bailout in the 2008 financial crisis. After a prolonged slump, shares in the bank recently hit a price that would allow the government to break even on its investment if it sold.
In November 2012, HSBC Bank Middle East Limited received the UAE Central Bank’s approval for its acquisition of Lloyds Banking Group’s onshore assets and liabilities in the UAE.
Abdulfattah Sharaf, CEO of HSBC UAE, said: “This announcement marks an important milestone in HSBC’s history in the UAE. HSBC first opened for business here in 1946 and has a record of long term commitment and investment in the UAE.
The business acquired from Lloyds Banking Group had about 8,800 personal and commercial customers and a loan book of approximately $573m (as at the end of 2011).
The HSBC deal did does not include Lloyds’ International Wealth Business in the UAE, which encompasses the lender’s private banking branch in Dubai International Finance Centre and its offshore international personal banking service.
* With Reuters
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