Standard Life Aberdeen PLC (LON:SLA) is contesting Lloyds Banking Group PLC’s (LON:LLOY) decision to pull £109bn of assets under management from the group.
Lloyds announced in February that it was terminating SLA’s contract to manage its Scottish Windows portfolio, saying the merger of Standard Life and Aberdeen raised competition concerns.
READ: Lloyds pulls £109bn in funds from Standard Life Aberdeen on competition concerns
In a statement on Tuesday, SLA said it does not agree with Lloyds’ reason for ending their deal and had no right to do so. SLA is now in talks to try to resolve the dispute with Lloyds.
The deal is worth £129mln in annual revenue to SLA, or 4.4% of its proforma 2017 revenue.
The contract to manage the assets was part of Aberdeen’s £650mln acquisition of the asset management unit of Scottish Widows from Lloyds in 2014.
It included a clause that allowed Lloyds to end the deal in the event Aberdeen was subject to a change of control with a "material competitor".
“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," Antonio Lorenzo, chief executive of Scottish Widows and group director of Insurance & Wealth, said in a statement in February.
Scottish Widows/Lloyds "surprised at the course of action"
In comments reacting to the statement, a spokesperson for Scottish Widows and Lloyds Banking Group said: “We note and are disappointed by the comments made by Standard Life Aberdeen, particularly in the light of our position as a major customer.”
They added: “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.”
“We are confident of our legal position and that our actions are in the best interests of our customers, and we are therefore surprised at the course of action pursued by Standard Life Aberdeen,” the spokesperson concluded in an emailed statement.
In early afternoon trading, Lloyds' shares were 0.7p higher at 65.82p, while Standard Life Aberdeen shares were 0.4p lower at 360.9p.
-- Adds Scottish Widow/Lloyds statement, share prices --