Lloyds Said to Lean Toward Several Managers for $153 Billion

(Bloomberg) -- Lloyds Banking Group Plc is likely to allocate the 109 billion pounds ($153 billion) that it's pulling from Standard Life Aberdeen Plc among several asset managers, a person with knowledge of the matter said.

Hiring a number of firms is seen as less risky though no final decision has been taken, the person said, asking not to be identified because the matter is private. A spokesman for the bank declined to comment.

Aberdeen secured the coveted mandate when it acquired Scottish Widows Investment Partnership from Lloyds in 2014. The bank chose to terminate the agreement in February after Aberdeen and Standard Life merged, a deal that transformed the company into a direct competitor to the lender's insurance business. Standard Life Aberdeen wants to continue managing the money for Lloyds, its biggest client, and has since agreed to sell its insurance unit. A spokeswoman at the fund declined to comment.

Read more about why Lloyds decided to pull the money from Aberdeen

Lloyds is holding a contest among asset managers interested in overseeing the money, Chief Executive Officer Antonio Horta-Osorio said at a press conference in February. The funds will be available to manage when the contract expires in June 2019.

Long-Term Relationship

“It's undoubtedly a large chunk of assets up for grabs, but it's relatively low-margin,” said Laith Khalaf, an analyst at Hargreaves Lansdown. “Lloyds is looking to beef up its financial planning and pensions business, which means asset managers probably see value in building a long-term relationship with the bank.”

The Britain's largest mortgage lender may seek “small” insurance acquisitions as the lender looks to grow its share of the pensions market, Horta-Osorio said in February after announcing the strategic plan. Lloyds acquired Zurich Insurance AG's U.K. pensions and savings business in an effort to broaden its 200-year-old Scottish Widows insurance division in late 2017.

Lloyds has previously invested in other funds as a way to diversify. The bank has worked with BlackRock Inc., M&G Investments, passive fund manager Dimensional Fund Advisors and emerging market specialist Somerset Capital Management among others, according to documents seen by Bloomberg News.

To contact the reporter on this story: Stefania Spezzati in London at sspezzati@bloomberg.net.

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Andrew Blackman, Jon Menon

©2018 Bloomberg L.P.