Standard Life Aberdeen (SLA) has settled its high-profile arbitration case with Lloyds Banking Group (LLOY), providing investors in the asset manager with some clarity on the fate of a highly disputed £104bn portfolio of assets.
The management of those assets was originally acquired by the legacy Aberdeen Asset Management in 2014, after it took on the Scottish Widows Investment Partnership. Lloyds later revoked the contract after Aberdeen’s tie-up with Standard Life, arguing that the merger created a rival to the lender’s insurance unit.
In March, a tribunal found that the UK bank was not entitled to end the arrangement. As a remedy, SLA will continue to manage around a third of the assets until at least April 2022. The remainder will be transferred to third-party managers including BlackRock and Schroders (SDR) over the next nine months, during which time SLA will continue to be paid for its services. Lloyds has agreed to pay SLA £140m, having already included the cost of a settlement within a £339m charge to its first-quarter income statement.
Analysts at Numis expect SLA to post earnings of 19p a share in 2019, and 19.4p in 2020, and to keep the annual dividend at 21.6p for the next three years.
