Britain’s biggest high street lender will this week unveil its biggest corporate acquisition since it returned to full private ownership four years ago.
Sky News has learnt that Lloyds Banking Group will announce alongside its half-year results on Thursday takeover of Embark Group, a privately owned provider of savings and retirement products.
The deal has been on the cards since May, and is expected to be welcomed by Lloyds investors keen to see it exploring opportunities to boost its profitability.
If completed, the deal will be arguably Lloyds’ most significant since it was bailed out by UK taxpayers with a £20bn capital injection in 2008.
Charlie Nunn will take over as chief executive of Lloyds in August
City sources said the takeover would cost Lloyds in the region of £400m.
It will crystallise payouts for some of the world’s largest asset managers, including BlackRock, Franklin Templeton and Legg Mason, all of which hold minority stakes in Embark.
The deal will come alongside half-year results which are expected to reflect growing confidence among UK lenders that they are recovering strongly from the pandemic.
On Wednesday, Barclays announced a resumption of dividend payments as it unveiled better-than-expected half-year profits.
Embark, which was recently named in a list of Britain’s most important fintechs, was established in 2012 by Phil Smith, who remains its chief executive and a substantial shareholder.
It calls itself the UK’s fastest-growing digital retirement group.
It has more than £40bn under administration and roughly 500,000 customers across the country.
The business has itself has grown through a string of major acquisitions, including that of Zurich’s investment and retail platform last year.
Embark offers a range of retirement and savings products under brands such as The Adviser Centre, Rowanmoor and Vested, as well as that of the parent company.
It also provides white-label services for the likes of BestInvest, Charles Stanley, Coutts and Moneyfarm.
The company employs more than 600 people across Britain, including in Edinburgh, London and Leeds.
It competes with the likes of AJ Bell and Pensionbee, which made its London stock market debut earlier this year.
For Lloyds, the takeover of Embark will represent a continuation of its strategy to expand in areas of financial services where it does not already have a market-leading position, such as wealth management and insurance.
One insider said the Embark deal would plug a gap in Lloyds’ retail investment proposition and open up a more effective IFA distribution channel for Scottish Widows mutual fund products.
Lloyds currently oversees about £170bn of assets through the division which includes Scottish Widows, Halifax Sharedealing and the Schroders Personal Wealth joint venture it established in 2018.
The announcement of the Embark deal will come nearly three months after Antonio Horta-Osorio stepped down as Lloyds’ chief executive following more than a decade at the helm.
Lloyds’ £1.9bn takeover of MBNA, the credit card group, announced in 2016, was the largest acquisition during his stint at the helm.
Mr Horta-Osorio’s successor, former HSBC executive Charlie Nunn, will arrive at Lloyds in August.
The company is being run in the meantime by William Chalmers, its chief financial officer.
Lloyds declined to comment.