Lloyds Bank Pulls £109B Plug On Standard Life Aberdeen

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A decision has always been expected after Aberdeen Asset Management, which had run the funds since 2013, combined with Scottish Widows' competitor Standard Life past year.

Keith Skeoch and Martin Gilbert, Standard Life Aberdeen's co-chief executives said: "We are disappointed by this decision in the context of the strong performance and good service we have delivered for Lloyds Banking Group, Scottish Widows and their customers". This included long-term contracts for the management by Aberdeen of £109bn of assets on behalf of Scottish Widows and LBG Wealth.

Following the conclusion of the six month period, 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.

Aberdeen completed a merger with Standard Life, a business Scottish Widows deems a major competitor, last year.


Antonio Lorenzo, chief executive of Scottish Widows, said the company had begun an "in-depth assessment of the market" to identify replacement managers. Lloyds sold Scottish Widows' investment business to Aberdeen in 2014, but the asset manager continued to run money for Lloyds customers.

Scottish Widows and LBG say there are no immediate changes for customers.

Standard Life Aberdeen PLC (LON:SLA) has earned an average recommendation of "Buy" from the eleven ratings firms that are now covering the company, MarketBeat Ratings reports.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said that LBG's decision to walk was hardly surprising given the rivalry between Standard Life and Scottish Widows, so "the prospect of one group managing the fund range of the other was never going to sit entirely comfortably in the corridors of power in Edinburgh".


The contracts have a 12-month notice period. Goldman Sachs Group restated a "buy" rating on shares of Standard Life Aberdeen in a report on Monday, February 5th. There's also an outside chance Lloyds may look to rebuild its own investment management capabilities, as it launches a new three-year strategy next week.

However, he says 12 months would be a very short amount of time to pull off such a move.

As of 08:35 GMT, Standard Life Aberdeen's share price had given up 4.85 percent to 370.40p, underperforming the broader United Kingdom market, with the benchmark FTSE 100 index now standing 0.54 percent higher at 7,252.98 points.


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