Lloyds Banking Group PLC (LYG), which is 43.5%-owned by the U.K. government, said Tuesday it is selling some parts of its non-core investment management business to investment management firm Rathbone Brothers PLC (RAT.LN) for up to GBP35.4 million.

The move comes a week after Lloyds agreed to sell its loss-making Halifax Estate Agencies business to LSL Property Services PLC (LSL.LN) for GBP1 as part of its ongoing strategic review.

Lloyds said Rathbones is purchasing its client portfolio in the Bank of Scotland Portfolio Management Service as well as two other client portfolios under Lloyds TSB Private Banking Ltd.

In total, the deal, which is subject to consent from clients, would see the transfer of around 6,000 customers with a total of around GBP1.27 billion of funds under management to Rathbones.

Lloyds said the price of the business being sold is based on a percentage of the funds under management being transferred to Rathbones. Assuming that all of GBP1.27 billion worth of funds are transferred, the total price payable to Lloyds would be GBP35.4 million, it said.

The bank said it will continue to manage GBP8.5 billion of assets under management for around 35,000 affluent and "high net worth" clients under its Investment Portfolio Management service which are not affected by the deal with Rathbones.

Due to the sale of the business, Lloyds said it will cut around 40 staff in Edinburgh by the end of 2011.

Company Web site: www.lloydsbankinggroup.com

-By Vladimir Guevarra, Dow Jones Newswires, +44 (0) 2078429486, vladimir.guevarra@dowjones.com