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Lloyds decision to pull £100bn portfolio from SLA ruled illegal

Lloyds decision to pull £100bn portfolio from SLA ruled illegal

Lloyds acted illegally when it pulled a £109 billion asset management contract from Standard Life Aberdeen in early 2018, a tribunal appointed to rule on the decision has found.

Company chief executive Keith Skeoch (pictured) 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.’

In early trading shares in Standard Life Aberdeen were 1.6% higher at 270p versus a FTSE 100 gain of 0.4%.

The funds, now worth £100 billion continue to be managed within SLA pending the termination date. ‘The company will continue to manage the assets in the best interests of [Lloyds'] customers,’ it said in a statement.

Lloyds decision to pull what at the time was a £109 billion portfolio of pension funds historically managed  by Aberdeen a year ago threw the company into turmoil, and added additional urgency to its plans to dump its Standard Life’s historical insurance business and focus on asset management.

The loss of the contract, which represented around 17% of SLA’s assets, also blew a sizeable 4% hole in the company’s fee revenue during a period of sustained retail redemptions.

The ruling may have a range of consequences beyond SLA’s bottom line, however. Lloyds has already awarded an £80 billion contract to Schroders, with the assets underpinning a wealth management joint venture between the two City giants.

The balance of the funds has been pledged to BlackRock.

'Given the merger of Standard Life and Aberdeen has resulted in our assets being managed by a material competitor, it is now appropriate to review our long-term asset management arrangements to ensure they remain up-to-date and that customers continue to receive good service and investment performance,' Scottish Widows chief executive Antonio Lorenzo said.

He added: 'We will begin an in-depth assessment of the market to identify a long-term strategic partner, or partners, to manage the current £109 billion of assets.'

Aberdeen has managed the assets for Scottish Widows since 2014, when the asset manager acquired Scottish Widows Investment Partnership (Swip) for £550 million. Under this deal Aberdeen took on the mandate for around £100 billion of Lloyds assets through the Swip business.

SLA took an immediate £40 million impairment charge following the announcement

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