Standard Life Aberdeen has agreed a multi-million settlement with Lloyds Banking Group/ Scottish Widows which settles a dispute over Lloyds’ decision to remove £104 billion of funds from Standard Life Aberdeen’s portfolios.
In its decision of March 2019, an arbitral tribunal found that Lloyds was not entitled to terminate these investment management arrangements.
Standard Life Aberdeen continued to manage approximately £104 billion of assets under management (AUM) for Lloyds entities during the period of the dispute.
Under the terms of the settlement, Standard Life Aberdeen will continue to manage approximately one third of the total AUM (circa £35 billion as at 30 June 2019) on behalf of Lloyds entities until at least April 2022, which is the end of the initial term under the original investment management agreements, subject to applicable investment management arrangements.
This assets under management comprises around £30 billion in passive portfolios as well as circa £5 billion in real estate funds.
Approximately two thirds will be transferred to third-party managers appointed by Lloyds through a series of planned tranches over the next nine months. During this period, Standard Life Aberdeen will continue to be remunerated for its services.
In addition, the Standard Life Aberdeen will receive an upfront payment of £140 million from Lloyds Banking Group as final settlement to compensate for loss of profit in relation to the Transferring AUM.
This settlement resolves all outstanding contractual differences between the parties.
Keith Skeoch, the chief executive of Standard Life Aberdeen, said: "We are pleased with the settlement with Lloyds Banking Group and believe that it represents a fair and positive outcome for both parties.
"We look forward to building on our relationship with LBG and continuing to deliver positive outcomes for their customers. The retention of assets in our passive strategies as well as active real estate portfolios positions us to benefit from scale and growth in these growing parts of the asset management industry. "
