Lloyds Bank Pulls £109B Plug On Standard Life Aberdeen

17 February 2018, 12:16 | Andres Norman

The Standard Life Aberdeen PLC (LON:SL) Stock Rating Reaffirmed by Citigroup Inc.

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A central pillar supporting last year's £11 billion (€12.4 billion) takeover of Aberdeen Asset Management by Standard Life crumbled on Thursday after the UK's largest fund manager lost its biggest client and a £109 billion investment contract. "There will be no shortage of people trying to cut a good deal [to manage Lloyds' assets]".

The companies said the reason behind ending the contract is the competition generated due to the meger between Standard Life and Aberdeen.

He added: 'We will begin an in-depth assessment of the market to identify a long-term strategic partner, or partners, to manage the current £109 billion of assets'.

Aberdeen Asset Management acquired SWIP in 2014, while Lloyds is the parent of Scottish Widows.

Standard Life Aberdeen said it would take a £40 million charge against intangible assets related to the contract with Lloyds, which has given 12 months' notice to terminate the partnership between the two companies. Finally, Deutsche Bank boosted their target price on shares of Standard Life Aberdeen from GBX 420 ($5.80) to GBX 470 ($6.49) and gave the stock a "hold" rating in a report on Monday, January 22nd. "We will be discussing the implications of this with LBG and Scottish Widows".

Standard Life and Aberdeen Asset Management merger
Scottish Widows to terminate £109bn asset management deal with Standard Life Aberdeen

Standard Life Aberdeen (SLA) traded down GBX 9.50 ($0.13) during trading on Friday, hitting GBX 389.30 ($5.38).

"There is a possibility Standard Life Aberdeen may retain this chunk of assets, subject to further negotiations".

Standard Life Aberdeen shares fell 6 per cent this morning on news Lloyds is terminating investment management arrangements with the asset manager on £109bn of assets.

Khalaf says: "This would make some sense now the bank has recovered from the financial crisis and will be looking for opportunities to grow and diversify".

SLA's shares cratered at the open following the announcement, falling nearly 9%, before recovering. In its base case - in which SLA can shed costs over three years equal to half the revenue associated with Scottish Widows assets - it sees 19% upside. However, losing a further £109bn having been crowned the worst-selling European-headquartered asset manager in the first nine months of 2017 isn't exactly a vote of confidence in what was supposed to be a dynamic merger for the United Kingdom fund management industry.

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