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Standard Life Aberdeen plc

Standard Life Aberdeen plc Settlement of arbitration with Lloyds Banking Group

Standard Life Aberdeen plc (LON:SLA) has today announced that it has agreed a final settlement with Lloyds Banking Group / Scottish Widows in relation to the arbitration proceedings between the parties concerning LBG’s attempt to terminate investment management arrangements under which assets are managed by members of the Standard Life Aberdeen group for LBG entities.

In its decision of March 2019, the arbitral tribunal found that LBG was not entitled to terminate these investment management arrangements.  The SLA Group has continued to manage approximately £104bn (as at 30 June 2019) of assets under management (“AUM”) for LBG entities during the period of the dispute.

Under the terms of the settlement:

·    The SLA Group will continue to manage approximately one third of the total AUM (circa £35 billion as at 30 June 2019) on behalf of LBG entities until at least April 2022 (the end of the initial term under the original investment management agreements) subject to applicable investment management arrangements. This AUM comprises circa £30 billion in passive portfolios as well as circa £5 billion in real estate funds.  

·    Approximately two thirds of the total AUM (the “Transferring AUM”) will be transferred to third-party managers appointed by LBG through a series of planned tranches over the next nine months. During this period, the SLA Group will continue to be remunerated for its services in relation to the Transferring AUM.

·    In addition, the SLA Group will receive an upfront payment of £140 million from LBG as final settlement to compensate for loss of profit in relation to the Transferring AUM.

This settlement resolves all outstanding contractual differences between the parties who are pleased to continue their commercial relationship focussing on delivering beneficial outcomes for customers.

Keith Skeoch, the Chief Executive of Standard Life Aberdeen, said “We are pleased with the settlement with LBG 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.