Scottish Widows and Lloyds Banking Group hired Schroders to manage about £80 billion ($105 billion) in insurance and wealth-related assets, following a review of the insurer's money management arrangements.
The assets are the remainder of £109 billion in wealth and retirement assets run on behalf of Lloyds Banking Group and subsidiary Scottish Widows by legacy Aberdeen Asset Management entities. The firms said in February they were reviewing their money management arrangements and had given notice to terminate contracts with Standard Life Aberdeen over competition concerns related to the merger last year between Standard Life and Aberdeen.
The hire of Schroders also includes the launch of a strategic partnership between the £449.4 billion money manager and Lloyds, which will see them create a financial planning firm for affluent investors.
Management of the £80 billion will be split. About £13 billion of assets will be transferred to the new joint venture between the two firms. Lloyds will own 50.1% and Schroders the remaining 49.9% stake, a news release said.
The joint venture is set to launch by the end of the first half of next year, subject to regulatory approvals. The management team will comprise both Schroders and Lloyds executives.
A further £400 million, in the form of private client assets, will be transferred by Lloyds into Schroders' U.K. wealth management business. Further, Lloyds will receive up to a 19.9% financial investment in the holding company of the wealth management business, providing Lloyds' high-net-worth clients with access to Schroders' Cazenove Capital wealth management strategies.
The management of the £13 billion and £400 million contracts will transfer to Schroders as soon as possible following an arbitration process between Lloyds and Standard Life Aberdeen, irrespective of the outcome, the release said. The management of the remaining £67 billion of assets will begin following the conclusion of the current arbitration process, or by no later than when the existing contract expires in March 2022.
"Wealth management is a strategic priority for Schroders," said Peter Harrison, group CEO at Schroders, in the release. "In combining our award-winning technology and world-class investment expertise with Lloyds' significant client base and digital capabilities, we are creating a strategic partnership which is exclusively focused on the evolving needs of U.K. savers and investors."
The £80 billion money management hire is a five-year contract covering a range of asset classes, including equities, fixed income, multiasset and private assets.