Lloyds Banking Group is to pay Standard Life Aberdeen (SLA) £140 million in compensation for loss of profit in relation to investment mandates that caused the two firms to clash.
The compensation is part of a settlement that Lloyds Banking Group, together with its Scottish Widows insurance arm, has agreed with SLA after a tribunal in March found that the banking group was wrong to terminate investment management mandates it held with SLA. For background read here.
Since March, SLA has continued to manage about £104 billion of assets for Lloyds entities.
Full terms of the settlement are:
- SLA will continue to manage about one third (circa £35 billion) of the total assets on behalf of Lloyds Banking Group entities until at least April 2022 when the initial term under the original agreements ends. About £30 billion is in passive portfolios and £5 billion in real estate funds.
- The other two thirds of total assets will be transferred to third-party managers appointed by Lloyds Banking Group over the next nine months. SLA will continue to be remunerated for its services in relation to the transferring assets during this period.
- The third part of the agreement is the upfront payment of £140 million from Lloyds Banking Group as final settlement to compensate for loss of profit in relation to the transferring assets.
The firms said the settlement “resolves all outstanding contractual differences between the parties”.
Keith Skeoch, the chief executive of Standard Life Aberdeen, said: “We are pleased with the settlement with LBG [Lloyds Banking Group] and believe that it represents a fair and positive outcome for both parties. We look forward to building on our relationship with LBG and continuing to deliver positive outcomes for their customers.
“The retention of assets in our passive strategies as well as active real estate portfolios positions us to benefit from scale and growth in these growing parts of the asset management industry.”
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