UK asset manager Schroders has won the investment mandate for the remaining £80bn ($92bn) of Scottish Widows’ portfolio as part of a deal with Lloyds Banking Group to create a wealth management business.
As reported by Insurance Asset Risk, Schroders took the lion’s share of Scottish Widows' £109bn investment contract, leaving BlackRock with the leftovers. The £80bn mandate includes £67bn from Scottish Widows insurance related assets and £13bn of wealth related assets.
The appointment will last for five years. The assets are still subject to arbitration after Lloyds terminated the contract with portfolio's former asset manager, Standard Life Aberdeen. Schroders’ mandate will begin after the arbitration process concludes or when the existing contract expires in March 2022.
As part of the deal, Schroders and Lloyds will establish a new financial planning joint venture company (JV) for affluent customers. Lloyds will own 50.1% of the share capital and Schroders the remaining 49.9%.
Lloyds will transfer the £13bn of wealth related assets from its existing wealth management business to the JV. There will also be a referral agreement in place to enable Lloyds’ customers to benefit from this proposition.
The JV aims to commence activities by the end of H1 2019, subject to required regulatory and other approvals. Antonio Lorenzo, chief executive of Scottish Widows and group director of insurance & wealth will be chairman and James Rainbow, Schroders’ co-head of UK intermediary, will be chief executive, also subject to regulatory approval.
