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Impact Investing

IPE special report May 2018

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Scottish Widows in back office deal

Scottish Widows has appointed State Street to take over back office operations for its entire life, pensions and investment products assets, estimated at £90bn (E153bn). Under the new arrangement which should be completed by the beginning of next year, State Street will provide custody, trustee and accounting and investment administration services, formerly outsourced to institutions including the Bank
of New York, Citigroup, the WM
Company and the Royal Bank of
Scotland Trust.
The move follows the acquisition in March of Scottish Widows by Lloyds TSB. In August last year Lloyd’s pulled out of global custody and advised its clients to move to State Street. “We were the preferred supplier. It is reasonable to say that this had been a logical continuation of that process,” says John Campbell, head of State Street’s operations in Europe. The mandate wasn’t thrown out to tender and State Street describes the change as a partnership approach.
State Street will integrate and run the investment administration for four component companies- Lloyds TSB Life, Pensions and Investments, based in Andover, Abbey Life, based in Bournemouth, the London-based asset manager formerly known as Hill Samuuel and Scottish Widows in Edinburgh- enabling it to provide a single delivery platform for all the life, pension and insurance products. Campbell says they will add State Street technology to the back office and they are developing further systems including a pre trade compliance system built in conjunction with Bloomberg.
They are also developing an online straight through processing system to manage trade flow and this should be ready by the first quarter of next year. “We are replacing quite a complex structure, a number of different systems, with the State Street environment that will provide a common platform and reporting to Scottish Widows.”
Says Mike Ross, chief executive of Scottish Widows, “Since Scottish Widows joined the Lloyds TSB Group, we have been working on a detailed programme of integration of our life, pensions and investment businesses.” He describes the integration of the investment administration functions of four component businesses to a single supplier as a “significant step forward for the new Scottish Widows”.

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