Schroders buys Cazenove Capital to bolster private banking

Signing contractSchroders has agreed to acquire Cazenove Capital in a deal that values the venerable private bank at £424 million (€496 million).

Cazenove, which counts the Queen of England among its customers, will bring a number of private clients and charities to Schroders and enhance the private banking services Schroders can offer.

Cazenove had nearly £19 billion under management, as of the end of February, of which £13 billion was in its private banking division and £6 billion in funds.

The merger will lift Schroders' private banking and wealth management division to nearly £30 billion and its total assets under management to nearly £230 billion, based on figures for the end of December.

Cazenove chief executive Andrew Ross will become head of UK private banking at Schroders, reporting to group head of private banking, Philip Mallinckrodt.

Ross says Cazenove's private and charity clients will be looked after by their existing teams but will benefit from a wider range of services and broader geographical investment expertise as a result of the acquisition.

The deal may help to lift morale at Schroders, which recently admitted it may sustain some outflows when its high-profile fund manager Richard Buxton leaves the company to join Old Mutual in June.

Cazenove shareholders will be entitled to receive 135 pence per share in cash and will receive the 2012 dividend of 4.75 pence per share on May 3.

Michael Dobson, chief executive of Schroders, says: “This transaction creates a leading, independent private banking and wealth management business in the UK, and brings additional investment talent in complementary strategies across UK and European equities, multi-manager and fixed income to asset management.”

The deal follows an announcement in December that Schroders would acquire US bond manager, STW Fixed Income Management, which had $12 billion (€9.2 billion) under management at the end of September.

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