Standard Life Aberdeen, one of the biggest names in investment management, has triumphed in a legal case with one the giants of the UK banking sector, Lloyds Banking Group, in an issue relating to its insurance business.
The dispute revolved around the merger of Standard Life and Aberdeen Asset Management back in 2017. Lloyds argued that the £11 billion deal meant it had the right to review Aberdeen’s contract to manage its pension assets on behalf of both its pension and insurance businesses – it deemed that Standard Life was a “material competitor” to both. As a result, it wanted to terminate a £100 billion investment management contract three years early.
However, now Standard Life Aberdeen (SLA) has won a legal battle to stop that termination – a move that could potentially cost the bank hundreds of millions in additional fees. SLA would have earned around £390 million in fees from the mandate with terms of the contract due to expire in 2022, and, according to a Reuters report, the tribunal determined that the bank was not entitled to give notice, in February 2018, of its intention to terminate the 2014 investment management agreement.
The decision has cast a shadow over Lloyds’ partnership with BlackRock and a wealth management tie-up it had agreed to with Schroders. It awarded a contract to BlackRock to manage £30 billion of assets back in October. It had earlier stated that the deal would begin following the arbitration process or after the expiration of the existing contract.
However, a spokesperson for Lloyds’ insurance and pensions arm Scottish Widows outlined that the company would still press ahead with the transfer of assets.
“Our strategy remains unchanged, which is to do the right thing for customers,” the spokesperson told Reuters. “We will continue to work closely with Standard Life Aberdeen to ensure there is no disruption to performance or service.”