Schroders and Lloyds discuss distribution deal

Schroders and Lloyds Banking Group are in discussion to see how they can work together in the wealth sector.

The fund management company confirmed reports over the weekend that discussions were taking place but said no formal agreement had been reached.

At the weekend, Sky News reported that the two companies would make a statement later this month that would see Lloyds owning 50.1% of shares in a joint venture with fund manager Schroders.

A deal could see Schroders expanding its distribution network through Lloyds wealth management into the mass-affluent wealth market, while Lloyds would benefit from Schroders technology.

Schroders investments in technology included work with Imperial College in 2014 to develop quant-led multi-asset investing tools, and this year the company appointed a firm to evaluate the large number of start-up tech firms Schroders would consider working with.

A Schroders statement said: “Schroders confirms that it is in discussions with Lloyds Banking Group plc with a view to working closely together in parts of the wealth sector.

“Discussions are ongoing and there can be no certainty that these discussions will lead to any formal arrangement being entered into. A further announcement will be made when appropriate.”

Sky also reported that the deal will also see Lloyds take a stake in Schroders’ Cazenove Capital business, and that Schroders would take on the investment management contract for Lloyds-owned Scottish Widows that came under review earlier this year in light of the merger between Aberdeen Asset Management – which holds the mandate – and Standard Life, which is a rival to Scottish Widows.

Standard Life Aberdeen (SLA) – the merged company – fought to keep the contract, but Lloyds is concerned about competition between its insurance subsidiary and SLA.

According to other reports, Schroders is in the final stages of selection for the mandate.

©2018 funds europe

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