Close Brothers completes sale of asset management arm to Oaktree
Banking group Close Brothers has completed the sale of Close Brothers Asset Management (CBAM) to global investment management firm Oaktree Capital Management.
The transaction, finalised on 28 February 2025, is expected to bolster the bank’s common equity tier 1 (CET1) capital ratio by approximately 120 basis points, from 12.1 per cent to 13.3 per cent.
The group said it expected to net a gain on disposal of approximately £59m. The figure is based on the “difference between the upfront cash consideration of £146m plus the fair value of c.£21m for the £28m of contingent deferred consideration in the form of preference shares,” as well as dividends paid, transaction costs and the CBAM‘s net asset value of £100m at the date of completion.
The lender first announced the deal in September 2024 as part of a series of moves to bolster its balance sheet.
Close Brothers has set aside £165m to cover the costs of investigations into the potential mis-selling of car finance, and this cash infusion will help the company cover these costs.
In the middle of February, the company said that following the £165m provision, its CET1 ratio would fall to 12 per cent, which was still “significantly above our applicable regulatory requirement of 9.7 per cent.”
CBAM, now classified as discontinued operations under IFRS 5, will reflect its disposal gains in Close Brothers’ full-year financial statements for 2025.
The estimated financial benefit remains subject to further auditing, with Close Brothers anticipating an additional 25 basis points increase in CET1 over the next three years from reduced operational risk-weighted assets.
The lender’s boos Mike Morgan described the transaction as a “significant milestone” for the group.
Oaktree plans a complete carve-out of CBAM, including a comprehensive rebranding, while investing in technology and operations to enhance service quality and efficiency.
Morgan said: “We are pleased to announce the successful completion of the sale of CBAM to Oaktree. This strategic transaction marks a significant milestone in delivering on our previously outlined management actions to strengthen the group’s capital base.”
Federico Alvarez-Demalde, managing director at Oaktree said: “We are delighted to partner with Close Brothers to execute the full carve-out of the asset management business. As a selected partner for this transaction, we are committed to working diligently to ensure a smooth transition for clients, including a comprehensive rebrand.
“We recognise the strength of CBAM’s platform and see significant opportunities to enhance its efficiency and service quality. We plan to invest in technology and operations to drive long-term growth and strengthen the business for the future.”