Scottish Widows and Lloyds Banking Group's (LBG's) wealth businesses have decided to review their asset management arrangements and terminate their partnership arrangements with Standard Life Aberdeen.
Scottish Widows and LBG Wealth entered into the partnership with Aberdeen Asset Management following the sale of Scottish Widows Investment Partnership in 2014. This included long-term contracts for the management by Aberdeen of £109bn of assets on behalf of Scottish Widows and LBG Wealth.
However, this deal allowed Scottish Widows to exit the contract should Aberdeen Asset Management be subject to a change of control with a "material competitor".
Aberdeen completed a merger with Standard Life, a business Scottish Widows deems a major competitor, last year.
At the time, Scottish Widows and LBG Wealth agreed to delay a decision regarding the exercise of their termination rights for a period of six months following completion of the merger, during which period the parties agreed to discuss in good faith ways to build a successful relationship and address the competition issue.
Scottish Widows and LBG Wealth said no such agreement has been reached and, as such, they have decided to terminate their partnership agreements with Standard Life Aberdeen and to review their long-term asset management arrangements.
Despite this, Scottish Widows and LBG Wealth left the door open for Standard Life Aberdeen - noting the firm had delivered "good service and performance" and would be able to participate in the review if it is able to resolve the competition issue.
LBG group director of insurance & wealth and Scottish Widows chief executive Antonio Lorenzo explained: "Given the merger of Standard Life and Aberdeen has resulted in our assets being managed by a material competitor, it is now appropriate to review our long-term asset management arrangements to ensure they remain up-to-date and that customers continue to receive good service and investment performance.
"Therefore, we will begin an in-depth assessment of the market to identify a long-term strategic partner, or partners, to manage the current £109bn of assets."
Scottish Widows and LBG say there are no immediate changes for customers.
The businesses say they anticipate implementing the new arrangements by the end of the first half of 2019 following the completion of the review.
Standard Life Aberdeen said it would take an "impairment charge of £40m on the intangible asset" relating to the Lloyds customer relationship but also pointed out the £109bn would only affect 5% of revenue for the 2017 financial year.
It currently runs £176bn in insurance assets and £646bn in total across the group meaning the £109bn will amount to nearly 17% of current assets under management.
Keith Skeoch and Martin Gilbert, Standard Life Aberdeen's co-chief executives said: "We are disappointed by this decision in the context of the strong performance and good service we have delivered for Lloyds Banking Group, Scottish Widows and their customers. We will be discussing the implications of this with Lloyds and Scottish Widows."
Professional Pensions' sister publication Investment Week understands the majority of assets Aberdeen Standard Investments manages for Scottish Widows are invested in strategies such as passive equity and buy and hold UK fixed income. It is believed that high-profile retail managers such as Devan Kaloo (emerging markets), Hugh Young (Asia Pacific), Harry Nimmo (UK smaller companies), Mike Brooks (Diversified Growth), Brett Diment (EMD) and Guy Stern (absolute return), will not be impacted by the shift.
Morningstar Investment Management (MIM) has launched a range of three multi-asset funds that will blend active and passive strategies to offer advisers low-cost solutions.
The government will set up an infrastructure bank to support investment and to co-invest alongside investors including pension funds.
The Retail Prices Index (RPI) will be reformed and aligned with the housing cost-based version of the Consumer Prices Index, known as CPIH, by 2030, the Treasury has confirmed.
Estatee agent denies a shareholder’s absence from voting is an issue, finds Minerva Analytics.