Lloyds Banking Group said Thursday it is terminating its contract with asset manager Standard Life Aberdeen, which manages a £109 billion ($153.5 billion) portfolio for two Lloyds subsidiaries, citing competition concerns.
Shares in Standard Life Aberdeen declined as much as 10% in early morning trading after Lloyds Banking Group announced it is to withdraw £109bn of assets now managed by Standard Life Aberdeen for Scottish Widows.
"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, Scottish Widows' CEO said in a statement.
To view the full article, register now.
Despite this, Scottish Widows and LBG Wealth left the door open for Standard Life Aberdeen - noting the firm had delivered "good service and performance" and would be able to participate in the review if it is able to resolve the competition issue.
There will be no immediate change of asset manager as further contractual conditions require any termination is subject to a 12 month notice period.
Olympic curling: Mixed doubles bronze medal Russian Federation vs. Norway results and highlights
HollywoodLifers , what do you think about Anastasia? Bryzgalova represents the " Olympic Athletes from Russia " team. Anastasia married Aleksandr past year and they had won the 2016 World Mixed Doubles Curling Championship.
The Scottish Widows contract was not an insignificant one for the fund group, representing 17% of its total £646bn AUM.
The loss of the contract looks particularly bad for Martin Gilbert, Aberdeen's chief executive at the time of the merger, who runs the enlarged group alongside Keith Skeoch, his Standard Life counterpart.
Arnaud Giblat, analyst at BNP Paribas, said the company earned a fee of 0.12-0.13 per cent on the assets it managed for Scottish Widows.
A United Kingdom pension fund and its parent bank have terminated about $200 billion in respective mandates with a major global asset manager.
"Lloyds and Scottish Widows now have 12 months to find a new home for this money", he added. Sanford C. Bernstein downgraded Standard Life Aberdeen to a market perform rating and set a GBX 430 ($5.94) price objective for the company.in a report on Tuesday, October 17th. This would make some sense now the bank has recovered from the financial crisis and will be looking for opportunities to grow and diversify.
SLA's shares cratered at the open following the announcement, falling nearly 9%, before recovering. Finally, Berenberg Bank increased their price objective on Standard Life Aberdeen from GBX 440 ($6.08) to GBX 460 ($6.36) and gave the stock a hold rating in a report on Friday, January 12th.