Standard Life Aberdeen wins 100 billion stg mandate dispute against Lloyds

LONDON (Reuters) – Standard Life Aberdeen has won a legal battle to stop Lloyds Banking Group from terminating a 100 billion pounds ($132.75 billion) investment management contract three years early, in a move that could cost the bank hundreds of millions of pounds in additional fees.

After a lengthy arbitration process, a tribunal has ruled that the bank was not entitled to give notice in February 2018 to terminate the 2014 investment management agreement, casting a pall over Lloyds’ new partnership with BlackRock and a wealth management tie-up with Schroders.

Lloyds had argued that an 11 billion pound merger between Standard Life and Aberdeen Asset Management in 2017 triggered the right to review Aberdeen’s contract to manage its pension assets on behalf of its wealth and insurance businesses, because it saw Standard Life as a “material competitor” to both.

SLA’s victory in the arbitration dispute raises questions about the payment of around 390 million pounds of fees the asset manager would have earned on the mandate, under the terms of the contract due to expire in March 2022.

SLA said it was considering the terms of the decision and appropriate next steps.

A spokesman for Scottish Widows said the company was “disappointed” with the tribunal’s decision but it would press ahead with plans to transfer assets to BlackRock and Schroders.

“Our strategy remains unchanged, which is to do the right thing for customers … We will continue to work closely with Standard Life Aberdeen to ensure there is no disruption to performance or service.”

Lloyds awarded BlackRock a contract to manage 30 billion pounds in assets in October, to be invested using the U.S. company’s various index strategies in one of Europe’s biggest investment contracts in 2018.

Lloyds had earlier said the BlackRock deal would begin after the arbitration process or when the existing contract expires.