Lloyds pulls £109bn in funds from Standard Life Aberdeen on competition concerns

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

Scottish Widows to terminate £109bn asset management deal with Standard Life Aberdeen

While the majority of United Kingdom stocks ended in positive territory, shares in insurer and asset manager Standard Life Aberdeen (SLA.L) tumbled 7.5 percent, hitting a 10-month low after Lloyds (LLOY.L) and Scottish Widows axed a 100 billion pound ($140 billion) asset management mandate with the firm.

Shares in Standard Life Aberdeen dropped as much as 10% at one stage after the announcement, before settling around 5% lower.

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Scottish Widows and Lloyds' Wealth entered arrangements with Aberdeen in 2014 worth $193 billion (SFr109 billion).

AN EDINBURGH financial giant will have to reduce the size of its business months after securing a record-breaking merger deal after an arch rival said it would pull £109 billion of assets from it.

Despite this, Scottish Widows and LBG Wealth left the door open for Standard Life Aberdeen - noting the firm had delivered "good service and performance" and would be able to participate in the review if it is able to resolve the competition issue. The bailed-out lender had agreed to keep the funds with the asset manager for six months following the merger of Standard Life and Aberdeen Asset Management, which was completed in August.

On the disclosure of this reason, CEO of Standard Life Aberdeen (SLA), Keith Skeoch and Martin Gilbertsaid expressed their disappointment.

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"We will be discussing the implications of this with LBG and Scottish Widows", the pair added.

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

"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".

Commenting on the news, Laith Khalaf, senior analyst at Hargreaves Lansdown said: "This is a blow for Standard Life Aberdeen, but has been on the cards ever since the merger".

Companies with exposure to South Africa were also among the biggest gainers as the rand ZAR= held near a three-year high after President Jacob Zuma resigned. The Lloyds contract represented a third of Aberdeen's assets.

"Some relief will come from the knowledge that Lloyds' funds only amounted to 5% of total group revenues due to the lower margin returns in comparison with the majority of assets". Numis Securities restated an "add" rating and issued a GBX 505 ($6.98) target price on shares of Standard Life Aberdeen in a report on Tuesday.

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