Standard Life Aberdeen shares fell 6 per cent this morning on news Lloyds is terminating investment management arrangements with the asset manager on £109bn of assets.
The Scottish Widows Investment Partnership assets have been pulled because Lloyds sees Standard Life as a rival. Aberdeen Asset Management acquired SWIP in 2014, while Lloyds is the parent of Scottish Widows.
The news represents a blow for Standard Life Aberdeen. Increasing scale was part of the rationale behind last year’s merger between Standard Life and Aberdeen Asset Management.
The funds represent around 17 per cent of Standard Life Aberdeen’s AUM, but only 5 per cent of revenues.
Hargreaves Lansdown investment analyst Laith Khalaf says Lloyds will now have 12 months to find a home for the money, but notes that it represents a low margin business and finding a company that is not a rival in the workplace pensions market could be challenging.
Khalaf says there is a possibility Standard Life Aberdeen may retain the chunk of assets, subject to further negotiations, or even an outside chance that Lloyds may look to rebuild its own investment management capabilities.
The bank is launching its three-year strategy next week.
Khalaf says: “This would make some sense now the bank has recovered from the financial crisis and will be looking for opportunities to grow and diversify.”
However, he says 12 months would be a very short amount of time to pull off such a move.