AN EDINBURGH financial giant will have to reduce the size of its business months after securing a record-breaking merger deal after an arch rival said it would pull £109 billion of assets from it.
Pensions business Scottish Widows has outsourced the management of its funds to Aberdeen Asset Management since 2014 but has decided to terminate that agreement after Aberdeen joined forces with Standard Life in an £11bn deal last August.
Standard Life and Scottish Widows have been rivals in the pensions market for the past 200 years and the latter believes it would be anti-competitive for the enlarged Standard Life Aberdeen to continue managing its funds.
“We believe there’s a material issue with competition - any time we are pitching to take on a workplace pension there’s a Standard Life guy waiting to go in,” a source said.
READ MORE: Scottish Widows pulls plug on £109bn Standard Life Aberdeen deal
Scottish Widows, which is owned by Lloyds Banking Group, has triggered a 12-month notice period with Standard Life Aberdeen, during which time it will put the management contract out to tender.
It is estimated that the loss of the business would reduce Standard Life Aberdeen’s £2.8bn turnover by around £140 million.
If Standard Life Aberdeen can eradicate the competition issue it would be able to retender to retain the Scottish Widows contract.
“If they can resolve the competition issue we’d welcome them back in,” the source said.
The most obvious way for Standard Life Aberdeen to resolve the issue would be to offload its own pensions arm, which is responsible for in the region of £180bn of assets.
READ MORE: Scottish Widows pulls plug on £109bn Standard Life Aberdeen deal
While that part of the business is more lucrative than the work for Scottish Widows is, a source at Standard Life Aberdeen indicated that the company is willing to consider all options to retain the Scottish Widows work.
“Hopefully we can find a solution,” the source said. “If we manage to resolve the competition issue then we can move forward.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here