Edinburgh-based fund management giant Standard Life Aberdeen (SLA) has launched a contract dispute process against Lloyds Banking Group (LBG) over LBG’s decision to cancel a £109 billion asset management contract.
In a stock exchange statement, Standard Life Aberdeen said: “On 15 February 2018, Standard Life Aberdeen plc (SLA) announced that Lloyds Banking Group (LBG) and Scottish Widows had sent SLA a notice on 14 February purporting to terminate the long-term asset management arrangements between them (IMAs) covering, in aggregate, around £109 billion of assets under management (AUM) at the end of a 12 month notice period.
“The annual revenue associated with the AUM (c.£129m**) represents around 4.4% of SLA’s FY 2017 pro forma revenue.
“SLA has informed LBG that it does not agree that, following the merger of Aberdeen Asset Management PLC and Standard Life plc, SLA was in material competition in the U.K. with LBG and that, therefore, SLA does not consider that LBG, Scottish Widows or their respective affiliates has the right to terminate the IMAs.
“The parties are engaging with each other within the framework of the dispute resolution process envisaged in the IMAs.
“SLA will provide a further update at the appropriate time.”
LBG responded by saying it was surprised by SLA’s move and is confident in its legal right to terminate the agreement.
“We note and are disappointed by the comments made by Standard Life Aberdeen, particularly in the light of our position as a major customer,” said LBG in a statement, claiming the contract to manage the assets would have ended in March 2022 in any event.
“Standard Life Aberdeen is a clear and material competitor of Scottish Widows and Lloyds Banking Group in the UK and to suggest otherwise is not credible,” said LBG.