The fund manager created 30 years ago by Martin Gilbert - and rescued from the split-capital disaster a decade ago - confirmed yesterday morning it was in discussions with Lloyds over the acquisition and a strategic partnership.
If the mammoth deal, worth up to £500 million, goes ahead, it would increase Aberdeen's funds under management by 75%, adding Swip's £145 billion to its own £201bn.
Aberdeen's interest, highlighted by The Herald on September 25, became more tangible with a TV report early yesterday detailing the all-share nature of a possible offer, prompting a quick response by the company and a sharp rise in Aberdeen's share price, which closed up 25.1p at 450.7p.
Aberdeen said the potential acquisition "would add further scale and diversity to the company's product range, thus complementing organic growth, consistent with the board's strategy."
It went on: "The proposed transaction would also offer substantial cost efficiencies and synergies. The company would expect any transaction agreed to be materially earnings per share enhancing.
"It would also reinforce the company's commitment to a progressive dividend policy and to return surplus capital to shareholders over time."
It would be the biggest coup yet, and potentially a swansong deal, for industry dealmaker Mr Gilbert, 58, who since 2009 has dampened talk of mega-deals and six months ago said any interest in Swip was "highly unlikely". He floated the company in 1991, established a market-leading Far East presence and a substantial property business, acquired Scottish managers Murray Johnstone and Edinburgh Fund Managers, and pulled off scale-building deals with Credit Suisse in 2005 and Deutsche Bank in 2009.
Last year, Aberdeen entered the FTSE-100 for the first time, and yesterday's 6% jump in market value could pave the way for its re-entry.
Aberdeen said a deal would be funded "through the issuance of new shares in the company to Lloyds and additional deferred payments in cash, conditional on the performance of the partnership over a period of years", adding there could be no certainty of any transaction or its terms.
For Lloyds, which paid £7.3bn for the whole of Scottish Widows in 2000, it would represent another bolstering capital reserves following the £1bn sale of half of its 60% stake in St James's Place.
Fund managers in Edinburgh had mixed views on the potential deal. One said: "It would be a diversification, so it is potentially defendable. Swip has got this huge passive business, which might appeal to them to bulk that side of things up, and they could make economies of scale and back office efficiency savings."
He said Aberdeen already had a sizeable Edinburgh office, which could mean more jobs would be retained in the capital than might be the case with another acquirer.
However, another fund manager suggested Aberdeen would be more likely to centralise back office operations around its London base, and of more importance would be the affect on high-level and ancillary employment. He said that much of the asset base was low margin, but might be retained, and Swip had some strength in property and fixed income. He said: "There are some individual managers there who I rate."
But he added: "Swip has lacked consistent leadership at times, and it is quite difficult when you are a life office to highlight individual managers - the market has moved more to star managers and that traditional style of fund management has not really delivered and is not really what people want to buy now."
Australian bank Macquarie and French bank Natixis have been cited as rival bidders in an auction never publicly disclosed by Lloyds.