Britain’s largest listed asset manager Standard Life Aberdeen (SLA) saw operating profits fall last year after Lloyds halted a £100billion-plus contract with it.
Pre-tax profits at the Edinburgh-based firm fell by 10 per cent in 2019 to £584million due to lower revenues arising from the ending of a contract with Lloyds Banking Group (LBG) over the management of its assets.
Fee-based revenues were down 13 per cent from the previous year while total assets under their management dropped by only a modest £6.9billion to £544.6billion.
LBG and korea SLA fixtures abutments Standard Life had clashed over the former’s decision to withdraw assets worth £109billion from the latter. A tribunal decided that Lloyds did not have the right to terminate the deal and they were forced to pay out £140million to Standard Life to settle the dispute
The lost contract with Lloyds cost Standard Life an extra £41billion in net outflows, more than its entire outflows in 2018.
Total net outflows equalled £58.4billion, though gross inflows rose by £11billion to £86.2billion.
The group said the outflows ‘continued reflecting investor sentiment towards emerging markets and equity markets more generally.’
Lloyds and SLA had clashed over the former’s decision to withdraw assets worth £109billion from the latter. Lloyds said this was justified, because Standard’s Life merger with Aberdeen Asset Management made it a ‘material competitor’ to Lloyds.
A tribunal decided though that Lloyds did not have the right to terminate the deal and they were forced to pay out £140million to Standard Life to settle the dispute.
Standard Life is also entitled to manage a third of Lloyds’ assets until April 2022.
In their annual report, Standard Life said: ‘We are pleased with the settlement with LBG and believe that it represents a fair and positive outcome.’
On a statutory basis, SLA swung to a £243million pre-tax profit from losses of £787million in 2018.
It also said the outlook was set to be volatile, given the coronavirus outbreak and equity market turmoil.
Chief executive Keith Skeoch stated: ‘The outlook for the markets and our industry in 2020 is turbulent with the additional complexity of COVID-19’
Chairman Douglas Flint wrote: implant overdenture ‘The spread of the COVID-19 coronavirus in China and beyond has already had a significant impact and could have a material disruptive effect on trade, supply chains and implant overdenture international travel.’
Standard Life says it expects both economic growth and implant overdenture inflation to be weak in the coming year, while interest rates are likely to be kept at their low levels.
Aside from the coronavirus, the business also expressed concerns over the future trade relationship that the UK will have with EU.
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