Lloyds, Standard Life settle $130 billion fund dispute

Lloyds Banking Group and its subsidiary Scottish Widows will pay £140 million to Standard Life Aberdeen as part of a settlement resulting from Lloyds’ efforts to terminate a £104 billion ($129.8 billion) investment mandate with Aberdeen Standard Investments, a spokesman for Standard Life Aberdeen confirmed.

The settlement follows a March decision by an arbitration panel that Lloyds Banking Group was not entitled to give notice or to terminate the money management agreements in respect of assets managed by Standard Life Aberdeen.

Lloyds and Scottish Widows had sent notice on Feb. 14, 2018, to Standard Life Aberdeen seeking to terminate the arrangements due to the merger between Standard Life and Aberdeen Asset Management in 2017. Lloyds considered the newly merged firm a material competitor of Scottish Widows and Lloyds’ wealth business.

According to a statement from Standard Life Aberdeen, in addition to the £140 million payment, Standard Life Aberdeen will continue to manage about one-third of the original portfolio, or £35 billion as of June 30, until at least April 2022, which was the original end of the initial term of the contract.

The portfolio will consist of about £30 billion in passive investments and £5 billion in real estate funds.

The other two-thirds of the existing portfolio “will be transferred to third-party managers appointed by LBG through a series of planned tranches over the next nine months,” the Standard Life Aberdeen statement said. Standard Life Aberdeen will continue to be compensated for its services in relation to the assets under management being transferred.

“We are pleased with the settlement with LBG and believe that it represents a fair and positive outcome for both parties. We look forward to building on our relationship with LBG and continuing to deliver positive outcomes for their customers,” Standard Life Aberdeen CEO Keith Skeoch said in the statement.

In a statement emailed by a Lloyds Banking Group spokeswoman, the company said, “We are pleased to have been able to reach agreement with Standard Life Aberdeen. We will continue to work closely with SLA to ensure there is no disruption to performance or service as we begin the process of an orderly transfer of assets to our new partners. There will be no immediate changes for our customers and we’ll keep them updated throughout this process.”