February 24, 2018

Lloyds pulls £109bn in funds from Standard Life Aberdeen on competition concerns

15 February 2018, 06:43 | Hattie Nash

The Standard Life Aberdeen PLC (LON:SL) Stock Rating Reaffirmed by Citigroup Inc.

Standard Life and Aberdeen Asset Management merger

Royal Bank Of Canada upped their target price on shares of Standard Life Aberdeen PLC from GBX 500 ($6.60) to GBX 520 ($6.86) and gave the stock an "outperform" rating in a report on Monday, August 14th.

"Aberdeen has delivered good service and performance and Scottish Widows and Wealth would welcome their participation in the review if Standard Life Aberdeen is able to resolve the competition issue".

Scottish Widows and Lloyds Banking Group's Wealth businesses have terminated their partnership agreements with Aberdeen Asset Management following its merger with competitor Standard Life.

The bank had agreed to delay its decision for six months after the merger completed, an arrangement that only expired on Wednesday.

Scottish Widows and Lloyds said in a statement they had given notice to SLA of their plans to terminate the deal, kick-starting a 12-month process to find a replacement provider or providers. "I think that what we now do is sit down and work out what strategic advantages there might be in working. more closely with Lloyds or whatever it might be".

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The asset management tie-up created a "material competitor", Scottish Widows chief executive Antonio Lorenzo said, adding "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. We will be discussing the implications of this with Lloyds and Scottish Widows".

Aberdeen took on the deal to manage the £109bn of assets when it bought Scottish Life Investment Partnership from Lloyds in 2014.

Professional Pensions' sister publication Investment Week understands the majority of assets Aberdeen Standard Investments manages for Scottish Widows are invested in strategies such as passive equity and buy and hold United Kingdom fixed income.

When no agreement had been reached, Scottish Widows made a decision to walk away from their partnership with Standard Life Aberdeen and review their long-term asset management arrangements.

Commenting on the news, Laith Khalaf, senior analyst at Hargreaves Lansdown said: "This is a blow for Standard Life Aberdeen, but has been on the cards ever since the merger".

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The Edinburgh-based company was managing the funds because Lloyds had sold the fund management...

"Losing this book of business would strike a sour note for the Standard Life Aberdeen merger, and undermines some of the rationale for joining forces, which was built on scale".

"There is a possibility Standard Life Aberdeen may retain this chunk of assets, subject to further negotiations".

The decision to terminate the deal comes a week before Lloyds updates the market on its next three-year strategic plan on February 21 and SLA's full-year results on February 23.

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