Standard Life Aberdeen has suffered a severe blow as its biggest client Scottish Widows has withdrawn £109bn of assets from the company.
When Standard Life and Aberdeen Asset Management merged six months ago, the prospectus for the merger contained the revelation that Scottish Widows, part of Lloyds Banking Group, was reviewing its partnership with the company.
The prospectus said a decision on the future of the £109bn of assets, managed by Aberdeen, would be made six months after the merger.
The deadline for this was 14 February, and, in a statement to the market this morning (15 February), Lloyds announced the termination of the agreement.
Post-merger Standard Life Aberdeen is a competitor to the core insurance business of Scottish Widows, because Standard Life has a pensions and wealth management business.
The £109bn of assets represents about one sixth of the £647bn of assets under management declared by the company in December 2017.
The agreement between Scottish Widows and Lloyds went back to 2014. Scottish Widows confirmed this morning that it expects to appoint new investment managers for the assets in the first half of 2019.
Antonio Lorenzo, chief executive of Scottish Widows, said: “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.”
Standard Life Aberdeen’s share price is down 4 per cent, after falling 9 per cent in early trading.