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Lloyds Banking Group's Scottish Widows set for Standard Life merger talks

Meetings today should seen Standard Life’s £11bn merger with Edinburgh–based fund manager Aberdeen Asset Management ratified by shareholders
picture of Lloyds logo
Lloyds sold Scottish Widows, fund manager arm to Aberdeen in 2013

A major shift in the Scottish wealth management landscape is one the cards  with Standard Life PLC (LON:SL.) now linked with a merger with Lloyds Banking Group PLC owned (LON:LLOY) pensions and life insurance group Scottish Widows.

Meetings today should seen Standard Life’s £11bn merger with Edinburgh–based fund manager Aberdeen Asset Management ratified by shareholders of both groups, but the Scottish Widows talk adds a third element to the mix.

Scottish Widows and Standard are two of the bulwarks of the Edinburgh-fund management community and have traditionally been rivals.

Lloyds, though, has been trying to shift the business on as its regroups back aground its core UK savings and mortgage and sets aside its bancassurance ambitions due to regulatory changes.

It sold the fund manager arm of Scottish Widows to Aberdeen in 2013, which gave Lloyds a 9.9% stake in the fund manager, a deal that also included a mandate to manage Scottish Widow’s money that was worth more than £130mln to Aberdeen last year.

The Standard Life and Aberdeen merger has given Lloyds an opportunity to exit this arrangement if it chooses six months following completion of the merger and with 12 months notice.

To be ratified, the new company, Standard Life Aberdeen, needs the support of 75% of Aberdeen's and 50% of Standard’s shareholders at today’s votes.

Standard Life still has a sizeable number of retail investors follwing its demutualisation and ther hae been concers over the governmance of the company with the bosses of both companies staying on in top roles.

The Competition and Markets Authority has also launched an investigation as the merger will create Europe’s second-biggest fund manager with £670bn under management.

Cost savings of £200mln a year have been predicted from the tie-up.

Lloyds rose 0.5% to 68.83p, Standard Life rose to 391.7p and Aberdeen jumped 3% to 294p.

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May 17 2017

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