Lloyds Banking Group profits have fallen below market expectations, as the bank took a hit of some £339m for cutting its contract short with Standard Life Aberdeen, a quarterly update today shows.
Earlier this year, SLA won a dispute with Lloyds over a £109bn investment mandate deal, from which the bank withdrew abruptly last year.
The dispute dates back to last February, when Lloyds decided that a major account managed for subsidiary Scottish Widows by Aberdeen Asset Management should be pulled, because Aberdeen had since merged with Standard Life, bringing the firm into “clear and material” competition with Scottish Widows.
This morning, the bank said exceptional costs of £339m included “an estimated charge for exiting the SLA investment management agreement” and “market volatility”.
A spokesman for Lloyds said the company would not break down the figure further.
Lloyds ultimately chose BlackRock to manage £30bn of Scottish Widows’ passive strategies.
The bank then appointed Schroders as an active manager of approximately £80bn of the Scottish Widows and Lloyds assets, and has also announced it will launch a new financial planning proposition for wealthy clients.
Lloyds reported £126m in restructuring costs for Q1 including “initial costs to establish the personal wealth joint venture with Schroders.”
Lloyds has also set aside a further £100m to cover missold payment protection insurance.
The bank also experienced high gross complaint volumes in Q1 which it said remained in line with its expectation of around 13,000 per week.