Standard Life Aberdeen said it has settled its long running dispute with Lloyds Banking Group, which will pay a settlement of £140m after severing the fund manager’s contract to run its £109bn Scottish Widows portfolio.
The settlement will see SLA continue to manage one-third of the total assets under management, around £35bn, until at least April 2022. Those assets contain around £30bn in passive portfolios and £5bn in real estate funds.
The remaining two-thirds of the assets will be transferred to third party managers, and SLA will also receive an upfront payment of £140m to compensate for lost profit. Lloyds has already agreed to divide up the mandate between BlackRock and Schroders, with whom it has set up a wealth management joint venture.
Keith Skeoch, the chief executive of Standard Life Aberdeen, said: “We are pleased with the settlement with Lloyds Banking Group and believe that it represents a fair and positive outcome for both parties.”
“The retention of assets in our passive strategies as well as active real estate portfolios positions us to benefit from scale and growth in these growing parts of the asset management industry,” he said.
SLA lost its biggest client in February last year when Lloyds decided to end the contract to manage the Scottish Widows portfolio three years early, following the £11bn takeover of Aberdeen Asset Management by Standard Life.
In March this year, SLA claimed victory in the long-running dispute after a tribunal set up to decide on the matter had ruled in its favour.
Lloyds did not immediately comment, but at the time of the tribunal said it was disappointed with the outcome of the arbitration but that it would work with SLA.
Earlier this week the Financial Times reported that Martin Gilbert, a fund industry veteran to helped orchestrate the merger between Standard Life Investments and Aberdeen Asset Management two years ago, is to step down from the board of SLA.