Standard Life Aberdeen to lose £109bn mandate from Lloyds

Standard Life Aberdeen to lose £109bn mandate from Lloyds

Standard Life Aberdeen has been stripped of £109bn of assets it manages on behalf of life insurer Scottish Widows.

Scottish Widows and Lloyds Banking Group's (LBG's) wealth businesses have chose to review their asset management arrangements and terminate their partnership arrangements with Standard Life Aberdeen.

"LBG and Scottish Widows have informed SLA that Scottish Widows and LBG's Wealth business intend to review their long term asset management arrangements including those services that are now undertaken by certain legacy Aberdeen entities under arrangements covering in aggregate c£109 billion of assets under management (the "AUM") and agreed by Aberdeen with LBG at the time of Aberdeen's acquisition of Scottish Widows Investment Partnership from LBG in 2014".

This morning Lloyds ended six months of speculation about the funds, which belong to customers of its Scottish Widows insurance arm, by saying that it could no longer have them managed by a "material competitor".

Aberdeen took on the deal to manage the £109bn of assets when it bought Scottish Life Investment Partnership from Lloyds in 2014.

The asset management tie-up created a "material competitor", Scottish Widows chief executive Antonio Lorenzo said, adding "It is now appropriate to review our long-term asset management arrangements to ensure they remain up-to-date and that customers continue to receive good service and investment performance".

Standard Life Aberdeen said that despite the size of the contract, it represented less than 5 per cent of its 2017 revenues.

"We will be discussing the implications of this with Lloyds Banking Group and Scottish Widows", they said in a statement.

In return, Lloyds had committed to keeping its assets invested with SLA for six months.

Lloyds could look to rebuild its own investment management capabilities, suggested Khalaf, but "12 months doesn't give the bank a great deal of time to pull off such a big u-turn, having sold SWIP to Aberdeen only a few years ago, so this doesn't look like a serious prospect for the time being".