Standard Life to take £40m hit as Lloyds pulls funds

Standard Life Aberdeen (SLA) said it was making an impairment charge of around £40m after Lloyds Bank announced it was withdrawing an estimated £100bn in funds controlled by its Scottish Widows investment arm.

"We are disappointed by this decision in the context of the strong performance and good service we have delivered for LBG, Scottish Widows and their customers," said SLA chief executives Keith Skeoch and Martin Gilbert.

“We will be discussing the implications of this with LBG and Scottish Widows."

Lloyds and Standard Life Aberdeen had been in talks on how to change their arrangement after Standard Life merged with Aberdeen.

Aberdeen acquired Scottish Life Investment Partnership from Lloyds in 2014 and with it the right to manage the funds in question. As part of the deal, Lloyds could terminate the contract if Aberdeen merged with a competitor.

Broker Numis said it estimated the financial impact on SLA would be smaller than the 15% share of its assets under management.

"We estimate around 5% of revenues, .8% of profits and 5% of value. Also, the 14 basis points estimated fee margin paid by Lloyds is already relatively low in our view," Numis said.

"In summary, we believe it is right for shareholders to be aware of the risk and it would undeniably be a blow to confidence in the group if it were to lose its largest customer so soon after the merger. Nonetheless, we note the likely direct financial impact would likely be less material than one might think."