SHARES in asset management giant Standard Life Aberdeen plunged by as much as nine per cent this morning after pensions business Scottish Widows announced that it was pulling the plug on a £109 billion management agreement with the firm.
After selling its asset management arm, Scottish Widows Investment Partnership, to Aberdeen Asset Management in 2014, Scottish Widows handed Aberdeen responsibility for running the money invested across its pensions and wealth arms.
The Edinburgh-based business, which is owned by Lloyds Banking Group, put this agreement under review after Aberdeen merged with Standard Life last year.
Having conducted a six-month review it has now decided to terminate the agreement, citing competition concerns.
Scottish Widows chief executive Antonio Lorenzo said: “Given the merger of Standard Life and Aberdeen has resulted in our assets being managed by a material competitor, it is now appropriate to review our long-term asset management arrangements to ensure they remain up-to-date and that customers continue to receive good service and investment performance.
“Therefore, we will begin an in-depth assessment of the market to identify a long-term strategic partner, or partners, to manage the current £109bn of assets.”
In a joint statement Standard Life Aberdeen co-chief executives Keith Skeoch and Martin Gilbert said they were disappointed by Scottish Widows’ decision “in the context of the strong performance and good service we have delivered”.
They added that they would be discussing the implications of the decision with both Scottish Widows and Lloyds.
Under the terms of the agreement between Scottish Widows and Aberdeen the former must give Standard Life Aberdeen a 12-month notice period before the management agreement is terminated.
Standard Life Aberdeen said it would take a £40 million impairment charge relating to the goodwill recognised when it signed the Scottish Widows deal.
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