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Standard Life Aberdeen to lose £109bn mandate from Lloyds

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Lloyds Banking Group intends to sack Standard Life Aberdeen from mandates worth £109bn (€123bn) due to competition issues.

The decision relates to investments run by Aberdeen Asset Management on behalf of Scottish Widows customers. Lloyds sold Scottish Widows’ investment business to Aberdeen in 2014, but the asset manager continued to run money for Lloyds customers.

However, the deal was placed under review following last year’s merger of Aberdeen with Standard Life – one of Lloyds’ competitors in the UK insurance sector.

In a statement, Lloyds said: “Aberdeen has delivered good service and performance and Scottish Widows and [Lloyds] would welcome their participation in the review if Standard Life Aberdeen is able to resolve the competition issue.”

In a statement, Standard Life Aberdeen co-chief executives Keith Skeoch and Martin Gilbert said they were “disappointed” by the decision and would discuss its implications with Scottish Widows and Lloyds.

Standard Life Aberdeen said it expected to take a hit of £40m to its 2017 results as a result of Lloyds’ decision. The revenue from the contracts made up less than 5% of its revenue last year, the company added. 

Antonio Lorenzo, chief executive of Scottish Widows, said the company had begun an “in-depth assessment of the market” to identify replacement managers.

The contracts have a 12-month notice period. Any changes are expected to be completed in the first half of 2019. 

According to data from IPE’s annual Top 400 Asset Managers report, Standard Life and Aberdeen ran a combined €393.8bn of institutional money at the end of 2016, making the merged entity the fifth largest institutional asset manager in Europe. Ranked by global assets, the new company was the 24th largest in the world.

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