Standard Life Aberdeen has revealed a tribunal ruled Lloyds Banking Group did not have the right to end a vast £100billion investment contract with the fund manager.
The tribunal found Lloyds should not have given notice to terminate the management agreement between the two firms following the merger of Standard Life and Aberdeen Asset Management.
In February 2018 Lloyds had claimed it was entitled to end the deal due to competition issues created by the 2017 merger.
The decision represents a setback for Lloyds’ foray into wealth management alongside City investment firm Schroders as the £100billion mandate was being used to get that business off to a flying start when it launches in June.
A tribunal has ruled Lloyds did not have the right to end a vast £100billion investment contract
Keith Skeoch, chief executive of Standard Life Aberdeen, said: ‘Now that the arbitration panel has ruled in our favour, we will carefully consider our next steps, working constructively with Lloyds to bring the matter to resolution.’
SLA added that, in the meantime, it will continue to manage the assets ‘in the best interests’ of Lloyds customers.
Shares in SLA rose 3 per cent after the announcement.
A spokesman for Lloyds-owned Scottish Widows said: ‘We are disappointed with the decision of the arbitration tribunal, and will look to discuss its outcome with Standard Life Aberdeen.’
He added: ‘We will discuss starting the process of an orderly transfer of assets to our new partners, BlackRock and Schroders.
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‘We will continue to work closely with Standard Life Aberdeen to ensure there is no disruption to performance or service.’
Aberdeen Asset Management first took on the assets when it bought Scottish Life Investment Partnership from Lloyds in 2014.
Laith Khalaf, senior analyst at Hargreaves Lansdown commented: ‘This is a big victory for Standard Life Aberdeen, and a serious setback for Lloyds’ new foray into wealth management.
Lloyds has already ear-marked the lion’s share of these assets to form the basis of its new joint venture with Schroders, and has also hired Blackrock to manage some passive strategies.
‘Negotiations will now begin between Standard Life and Lloyds to find some sort of resolution,’ Khalaf continued. ‘This could involve Standard Life Aberdeen remaining as manager of the assets until 2022, or Lloyds stumping up some cash for breaking the agreement early.
‘We think there could even be a bit of mix and match, where Lloyds pays to release some assets to get its joint venture with Schroders up and running, while leaving some funds with Standard Life Aberdeen. We’ll be watching for further details as and when negotiations are concluded.’