Lloyds pays Standard Life Aberdeen £140m to end row over funds shift

Standard Life Aberdeen (SLA) and Lloyds have settled their long-running dispute over a decision by the banking giant to move £109 billion of assets to other fund managers.

The news comes as Standard Life Aberdeen plays down reports that vice chairman Martin Gilbert is set to leave. Picture: Graham Flack
The news comes as Standard Life Aberdeen plays down reports that vice chairman Martin Gilbert is set to leave. Picture: Graham Flack

Under the agreement confirmed yesterday, Lloyds will pay SLA £140 million upfront and the fund manager will continue to look after around a third of the assets for the next three years at least.

News of the settlement came as SLA also moved to dampen speculation that vice chairman Martin Gilbert was planning to leave the board to become chairman at London-based digital bank Revolut.

“If the company had any announcements to make as regards its executive team, then it would do so through the proper channels. As policy we don’t comment on rumour and speculation,” SLA said.

A spokesman for Revolut said it was planning to announce a number of senior appointments in the coming weeks but added “we’re not commenting on speculation around certain individuals”.

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Revolut did confirm that Gilbert has been acting as a personal advisor to its chief executive since last year.

SLA’s chief executive Keith Skeoch said he believed the settlement with Lloyds represents “a fair and positive outcome for both parties”.

On top of the £140m upfront payment to compensate for loss of profit, SLA will continue to manage around £35bn of the assets until at least April 2022, which was the end of the initial term under the original investment management agreements.

The assets are made up of around £30bn in passive portfolios as well as some £5bn in property funds. The remaining assets under management will be transferred to third-party managers appointed by Lloyds over the next nine months and SLA will continue to be paid for its services in the meantime.

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“We look forward to building on our relationship with [Lloyds] 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,” said Skeoch.

Analyst David McCann at Numis said the value of the settlement was in line with the broker’s expectations. Although the fees that will be paid on the retained assets under management have not been disclosed, McCann estimates the total value to SLA to be between £177m and £214m.

The deal comes after a tribunal ruled in March that Lloyds did not have the right to end the contract with the asset manager. Last May, SLA had launched a challenge against the lender’s decision to end the lucrative contract.

Lloyds had claimed it was entitled to end the agreement due to competition issues with its Scottish Widows business, which were created by the merger of Aberdeen Asset Management and Standard Life in 2017. Lloyds had been SLA’s largest single client.