Schroders is set to land the £109bn Scottish Widows mandate as it offers a stake in its wealth arm Cazenove Capital as part of the negotiations, according to reports.
Schroders has been competing for the mandate, one of Europe's largest investment contracts, alongside BlackRock, J.P.Morgan Asset Management and Goldman Sachs Asset Management.
The battle has been running since Scottish Widows' owner, Lloyds Banking Group, cancelled its contract with Standard Life Aberdeen in February on the grounds of competition between the insurers.
Following a review of its Scottish Widows Wealth business, Lloyds gave SLA a 12-month notice period for the termination of current arrangements.
According to the Financial Times, Schroders is now the frontrunner after offering a joint venture, which would allow Lloyds to take some control of Cazenove, the wealth business Schroders acquired five years ago.
While SLA was allowed to bid for the mandate, it is not thought to be through to the latest round, the FT reported.
The contract is one of the largest ever in the UK withdrawn from a single client, accounting for about a third of the total assets that Aberdeen brought to Standard Life as part of their £11bn combination.
Although Schroders, led by chief executive Peter Harrison, has appeared to have seen off the competition, one option still under consideration is to offer BlackRock a smaller portion of assets to manage with Schroders taking the majority, said FT sources.
Lloyds had said it would announce the award of contract in August but is still in disputes with SLA, the publication said.
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