Lloyds pulls £109bn from Standard Life Aberdeen

Standard Life Aberdeen co-CEOS Keith Skeoch and Martin Gilbert

However, the deal had included a clause that allowed the bank to terminate the contract in the event Aberdeen was subject to a change of control with a "material competitor".

The fund group's shares were rattled following the news, sinking more than 5% as trading began on Thursday.

However, post-merger with Standard Life, the unified group became "a material competitor" to the bank's investment and pensions subsidiary, explained Antonio Lorenzo, chief executive of Scottish Widows and group director of insurance & wealth.

Scottish Widows and LBG Wealth said no such agreement has been reached and, as such, they have made a decision to terminate their partnership agreements with Standard Life Aberdeen and to review their long-term asset management arrangements.

It now runs £176bn in insurance assets and £646bn in total across the group meaning the £109bn will amount to almost 17% of current assets under management.

"The assets under management (AUM) headline is far worse than the revenue and profit aspect of it", he said.

Keith Skeoch and Martin Gilbert, Standard Life Aberdeen's Chief Executives, noted that they were "disappointed" by the decision.

SLA said that despite the size of the contract, it represented less than five per cent of its revenues past year.

A Standard Life logo sits on a wall outside Standard Life House, the headquarters of Standard Life Plc, in Edinburgh, U.K., on Saturday, Aug. 9, 2014.

"The only way it might have worked was for Standard Life Aberdeen to hoover up Widows and all the other bits and pieces around it, that could have been a possibility but clearly didn't happen", he said.

The potential loss of the contract was flagged in the deal's "risk factors" but the Lloyds announcement came as a surprise. You might think that with £109bn of assets on offer this might be an easy task, but these funds have to be managed at relatively low cost with enough margin for both the investment manager and Lloyds to make a turn.

Mr Gilbert said he was confident in Standard Life Aberdeen's future and dismissed concerns the business was going into reverse.

The Lloyds Banking Group mandate represents close to a fifth of Standard Life Aberdeen's assets under management, which have already fallen from £670 billion to £646 billion because of a wave of investor redemptions and despite the uplift from near record equity prices. However, the notice terminating the Lloyds mandate is greater than the entire assets under management at Man Group, the UK's third-largest listed asset manager.



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