The Courier & Advertiser (Angus and Dundee)
Blow to new finance giant as Widows pulls billions
FUNDS: Standard Life Aberdeen dismay as Scottish Widows cuts asset management ties
Shares in Standard Life Aberdeen took a hit yesterday after Scottish Widows confirmed it was pulling £109 billion of assets placed under the management of the newly formed finance giant.
SLA co-chief executives Martin Gilbert and Keith Skeoch were “disappointed” by Scottish Widows’ and parent Lloyds Banking Group’s decision to terminate the current investment management arrangement.
Scottish Widows placed the funds with Aberdeen Asset Management in 2014, prior to its multi-billion-pound merger with Standard Life last year.
SLA said it will take an impairment charge of around £40 million on the “intangible asset relating to the LBG (Lloyds) customer relationship recognised at the time of the merger” in its 2017 full-year results.
“We are disappointed by this decision in the context of the strong performance and good service we have delivered for LBG, Scottish Widows and their customers,” Mr Gilbert and Mr Skeoch said.
“We will be discussing the implications of this with LBG and Scottish Widows.”
Scottish Widows said its contract with Aberdeen enabled it to terminate its relationship in the event of a change of control with a material competitor.
It said Aberdeen’s merger with Standard Life allowed it to trigger the contract clause as Standard Life was a competitor of both it and Lloyd’s Banking Group’s Wealth business.
However, a six-month grace period was agreed to allow the parties to “discuss in good faith ways to build a successful relationship and address the competition issue.”
Scottish Widows said the deadline had passed without agreement and the decision had been taken to terminate partnerships with SLA and institute a wider review of its long-term asset management arrangements.
The company said Aberdeen had delivered good service and performance in its asset management role and would welcome its participation in the review if SLA was able to resolve the competition issue.
There will be no immediate changes for customers as a result of Scottish Widows’ decision, with any new arrangements likely to come in the first half of next year.
“Given the merger of Standard Life and Aberdeen has resulted in our assets being managed by a material competitor, 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,” Antonio Lorenzo, chief executive of Scottish Widows and group director of insurance and wealth, said.
“Therefore, we will begin an in-depth assessment of the market to identify a long-term strategic partner, or partners, to manage the current £109bn of assets.”
Shares in Standard Life Aberdeen fell 7.53% or 29.30p to 360p.