Standard Life Aberdeen loses assets
Lloyds and Schroders unveil wealth management JV
Widows assets under new management (pic: Terry Murden)
Lloyds Banking Group and Schroders have confirmed the merger of their wealth management businesses and the transfer of a £67 billion mandate from Standard Life Aberdeen to the new venture.
It aims to become a top three UK financial planning business within five years and Schroders will become the active investment manager for £80bn of assets.
Lloyds will transfer £13bn of assets and associated advisers from its existing wealth management business to the JV and the bulk of the remaining Scottish Widows funds still managed by Standard Life Aberdeen.
Lloyds controversially announced in February that it would be switching the £109bn Scottish Widows mandate from its Edinburgh rival in a dispute over “competition” concerns following Standard Life’s merger with Aberdeen Asset Management. Earlier this month it allocated £30bn to BlackRock and Schroders was tipped to pick up the remaining assets.
The new Lloyds-Schroders partnership will effectively kill off a legal challenge by Standard Life Aberdeen which is contesting Lloyds’ claims.
In today’s statement he new partners said Schroders will take up management of the Scottish Widows insurance related assets will following conclusion of the current arbitration process with Standard Life Aberdeen or by no later than when the existing contract ends in March 2022.
Lloyds said it remains confident in its rights to terminate the current asset management agreements and expects the arbitration process to conclude early next year.
It said the new partnership will accelerate the development of its financial planning and retirement business.
For Schroders, it will continue its expansion into the UK wealth management market, building on its core strengths in active investment management.
Lloyds will own 50.1% of the share capital and Schroders the remaining shares. The companies said the JV will address “the growing gap in the advice market”.
The JV aims to commence activities by next summer and will be led by a management team comprising representatives from both partners.
Antonio Lorenzo, chief executive of Scottish Widows and group director of Insurance & Wealth will be chairman and James Rainbow, Schroders’ co-head of UK intermediary, will be chief executive.
The deal will provide Lloyds’ high net worth customers with access to Cazenove Capital’s leading wealth management propositions.
António Horta-Osório, group chief executive of Lloyds, said the JV “provides a strong platform for growth and is a further step in the delivery of our strategic objectives.”
Peter Harrison, his counterpart at Schroders, said: “Wealth management is a strategic priority for Schroders.”