Lloyds to pay £140m over fund row with Standard Life

LLOYDS Banking Group is poised to hand over £140m to settle a legal row with Standard Life Aberdeen (SLA) over a £100bn fund management mandate, after an arbitration panel said the bank was not entitled to pull out of the arrangement.

The cash settlement, first reported by Sky News, is less than had been anticipated, but SLA will retain the management of £30bn of assets for three years.

The dispute, which has lasted almost 18 months, is due to be finalised later this week. But sources have warned that an agreement is yet to be formally reached and that the deal could change.

The rationale behind Standard Life and Aberdeen’s £11bn merger in 2017 was thrown into question last year after Lloyds said it would ditch its £106bn asset management contract with Aberdeen as a result of the deal.

In March a tribunal ruled that Lloyds had no right to terminate its agreement with Edinburgh-based lender SLA, which later led to Lloyds saying that it had set aside £339m to cover severance costs relating to the dispute.

Laith Khalif, an analyst at Hargreaves Lansdown, said the two sides were likely to thrash out a “mix-and-match” deal whereby Lloyds pays to release some assets to get its planned joint venture with SLA rival Schroders running.

After ditching its tie-up with SLA, Lloyds had planned to hand the majority of the contract to Schroders as well as a portion to Blackrock.

Lloyds and Schroders also agreed to an £80bn tie-up of their wealth management arms in a deal that will see two of the City’s biggest players join forces. Aberdeen began managing assets for Lloyds’ Scottish Widows in 2014 after buying the Scottish Life Investment Partnership from the bank.

Lloyds had argued that there was a clause in the deal that allowed it to end the agreement if Aberdeen was to merge with a competitor. After Aberdeen merged with Standard Life in 2017, it viewed the combined business as a competitor to its investment arm.

Earlier this year SLA ditched its controversial co-head structure which saw Martin Gilbert, step down to become vice-chairman of the company.

£106bn Amount asset management deal between Lloyds and SLA was worth. The bank was ruled to have had no right to end it