Official confirmation from Standard Life Aberdeen about its settlement with Lloyds has revealed it will continue to look after real estate assets for the bank alongside the £30bn worth of passives already reported.
The asset manager confirmed it is receiving a settlement of £140m and will continue to run approximately a third of the £104bn mandate Lloyds announced it would be pulling from it in February 2018 and subsequently handed to both Schroders and Blackrock.
Sky News had already reported this week that SLA would retain management of the £30bn passives portfolio that had been due to go to Blackrock. A regulatory filing issued on Wednesday morning confirmed £5bn in real estate would also remain with SLA.
SLA will manage the £35bn until April 2022, despite the fact the initial contract had been due to expire in 2020.
The remaining £69bn will be transferred to Schroders in tranches over the next nine months. SLA will continue to take fees during the transfer period alongside the £140m compensation for the lost mandate.
Lloyds has not issued an RNS on the matter, although in its Q2 2019 update it lumped the settlement charge into a one-off £339m charge for “adverse movements in banking volatility and an estimated charge for exiting the Standard Life Aberdeen investment management agreement”.
SLA better known for active management
Standard Life is better known for its active fund management, particularly following its merger with Aberdeen Asset Management, said Willis Owen head of personal investing Adrian Lowcock.
“While they do not have the scale of market leaders Blackrock in passive investing, they do have sufficient scale and resources that this shouldn’t be too much of a problem, although costs play such a big factor in passive investing.”
Lowcock said SLA’s property expertise is “well established in the industry and well respected”.
He added: “The decision for Lloyds to move the money in the first place was as much a commercial one as anything so investors shouldn’t be too disrupted by the result.”
Standard Life Aberdeen chief executive Keith Skeoch said the settlement “represents a fair and positive outcome for both parties”.
Skeoch said: “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.”
