Close Brothers Group has finalised the divestment of Close Brothers Asset Management (CBAM) to Oaktree Capital Management, a leading global investment management firm.
The deal, which was completed on 28 February 2025, is anticipated to enhance the banking group's common equity tier 1 (CET1) capital ratio by around 120 basis points, elevating it from 12.1% to 13.3%, as reported by .
The transaction saw Close Brothers receiving an initial cash payment of £146m and contingent deferred consideration estimated at about £21m in preference shares.
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The group anticipates a gain on disposal of approximately £59m, calculated 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," in addition to dividends received, transaction costs, and CBAM's net asset value of £100m at the time of completion.
This strategic move was first announced in September 2024 as part of Close Brothers' efforts to strengthen its balance sheet. With a provision of £165m set aside for potential car finance mis-selling investigations, this influx of funds will assist in covering these expenses.
In mid-February, the company had indicated that after accounting for the £165m provision, its CET1 ratio would decrease to 12%, which remained "significantly above our applicable regulatory requirement of 9.7 per cent."
Close Brothers has finalised the sale of its asset management division, CBAM, to Oaktree, with the deal expected to yield a financial gain that will be reflected in the company's 2025 full-year financial statements.
The transaction is anticipated to result in a 25 basis point increase in CET1 over the next three years due to reduced operational risk-weighted assets, pending further auditing.
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Close Brothers' CEO, Mike Morgan, hailed the deal as a "significant milestone" for the group, while Oaktree's managing director, Federico Alvarez-Demalde, expressed enthusiasm about the partnership, committing to a seamless transition for clients and investing in technology and operations to boost efficiency and service quality.
Alvarez-Demalde stated: "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."
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."