Schroders and Lloyds Banking Group have sealed a deal to create a partnership that the two firms hope will become a top 3 player in wealth management within five years.
Schroders will receive £80 billion of assets to manage from Lloyds businesses, which include the Scottish Widows investment mandate that incumbent manager Standard Life Aberdeen is fighting to keep.
Lloyds and Schroders, who admitted talks were on when secrecy was recently blown, said the deal would “address the growing gap in the advice market”.
Lloyds is to give access to its client base and distribution channels to Schroders in return for investment expertise and technology in a joint venture that will see Lloyds hold 51.1%, and Schroders the rest.
The bank will transfer around £13 billion of assets as part of the wider £80 billion from its existing wealth business to the partnership.
Lloyds will receive up to a 19.9% financial investment in the holding company of Schroders’ UK wealth management business and this will provide Lloyds’ high-net-worth customers with access to Schroder-owned Cazenove Capital’s wealth management facilities.
One observer, speaking off the record, said the deal could create dozens of jobs at Schroders.
The joint venture, which aims to launch by the end of June next year, could mean Standard Life Aberdeen is more likely to lose its fight to keep the Scottish Widows mandate. Lloyds said it was “confident in its rights to terminate the current asset management agreements and expects the arbitration process to conclude early next year”.
Failing that, the contract with Standard Life Aberdeen ends in March 2022.
Peter Harrison, group chief executive of Schroders, said: “Wealth management is a strategic priority for Schroders. In combining our award-winning technology and world-class investment expertise with Lloyds’ significant client base and digital capabilities, we are creating a strategic partnership which is exclusively focused on the evolving needs of UK savers and investors.”
He added: “I am also delighted that we have been entrusted to manage £80 billion of assets for Lloyds’ and Scottish Widows’ clients.”
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