Widows blow for Standard
STANDARD Life Aberdeen is set to be stripped of £109billion of assets that it manages for Scottish Widows and parent company Lloyds Banking Group.
Shares in the FTSE 100 asset manager, created by the 2017 £11billion merger of Standard Life and Aberdeen Asset Management, fell 29¼p to 360p after it was given notice to terminate partnership agreements with its biggest customer.
Aberdeen had gained the right to manage the assets when it bought Scottish Widows Investment Partnership from Lloyds in 2014. But Lloyds had the right to end the deal if Aberdeen was subject to a change of control with a material competitor.
Lloyds acknowledged that Aberdeen had delivered good service, but it has not been able to resolve the issue of having its assets managed by Standard Life, with which its Scottish Widows business competes in the pensions market.
Scottish Widows CEO Antonio Lorenzo said: “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.
“Therefore, we will begin an in-depth assessment of the market to identify a long-term strategic partner, or partners, to manage the current £109billion of assets. There are no immediate changes for customers. We anticipate implementing the new arrangements by the end of the first half of 2019. We will work with Standard Life Aberdeen to ensure no disruption to performance or service.”
The Lloyds mandate represents about 17 per cent of Standard’s £646billion under management, but less than 5 per cent of its annual revenue. Standard will take an impairment charge of £40million.
Standard’s joint chief executive Martin Gilbert, pictured, said: “We are disappointed by this decision in the context of the strong performance and good service we have delivered for Lloyds, Scottish Widows and their customers.”
The mandate could be split between different asset managers, which may include Standard if competition issues can be resolved. Lloyds dismissed speculation that it could rebuild its own investment management operation.
Hargreaves Lansdown senior analyst Laith Khalaf said: “This is a blow for Standard Life Aberdeen. It undermines some of the rationale for joining forces, which was built on scale.”