Lloyds sale boosts dividend hopes

Lloyds Banking Group fuelled the City's dividend hopes today with the sale of its remaining stake in wealth manager St James's Place.

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Chief executive Antonio Horta-Osorio secured a gain of £105 million on the sale of Lloyds Banking Group's remaining 21% stake in wealth manager St James's Place

Lloyds Banking Group fuelled the City's dividend hopes today with the sale of its remaining stake in wealth manager St James's Place.

The group, which is 33% owned by the taxpayer, booked a gain of £105 million and secured a further boost to its capital position following the disposal of its 21% holding in St James's for £680 million.

Analysts said last night's placing increases the chances that Lloyds will be able to convince regulators that it is financially strong enough to resume dividend payments to shareholders in February.

The interest in St James's dates back to 2000 when Halifax - which later became HBOS and then part of Lloyds - bought a 60% stake.

Lloyds reduced its holding in two previous share sales in March and May, with the first sale securing a profit of around £400 million.

Chief executive Antonio Horta-Osorio said the disposal enhanced the group's focus on core UK retail and commercial banking customers.

He added: "The sale of the remaining stake in St. James's Place releases further resources and represents another step towards refocusing this business on its core customers."

Gary Greenwood, an analyst at Shore Capital Stockbrokers, said Lloyds' capital ratio - an important measure of financial strength - was set to exceed 10% at the end of 2013, "bolstering the possibility of a resumption in dividend payments to ordinary shareholders".

He added: "Shore Capital retains a positive stance on Lloyds shares, viewing them as a geared play on a recovering UK economy."

St James's Place is one of the UK's leading wealth managers, with around 180,000 clients and £42 billion in funds under management.

In September, the Government sold a £3.2 billion chunk of Lloyds as it began the process of returning the bank to private hands. The move reduced the taxpayer stake from 38.7% to 32.7% and fuelled expectations that there will be further sales early next year.