Standard Life Aberdeen said on Thursday it had been served notice on a 109 billion pound ($153 billion) asset management deal by its biggest client, Lloyds Banking Group , further denting shares in the recently-merged group.
Clients have pulled billions of pounds in assets in the six months since Standard Life and Aberdeen Asset Management formed one of Britain's biggest asset managers, and the Lloyds mandate represents 17 percent of SLA's remaining 646 billion pounds under management.
The 11 billion pound merger triggered the right for Lloyds and Scottish Widows, which is part of the British bank, to review an agreement struck in 2014 for Aberdeen to manage pension assets on behalf of Lloyds' insurance and wealth units as Standard Life is a "material competitor" to both.
At the time of the merger, SLA said it had agreed with Lloyds to discuss "ways in good faith to build a successful relationship", and in return, Lloyds committed to keeping its assets invested with SLA for six months.
The two sides had been discussing the sale to Lloyds of a book of Standard Life's corporate pension business now closed to new customers, four sources told Reuters. Two told Reuters those talks had stalled. SLA declined to comment on the talks.
Meanwhile, Scottish Widows has been expanding in corporate pensions and parent Lloyds also has broader ambitions in insurance after buying Zurich Insurance's UK workplace pensions and savings business in October.
"We are disappointed by this decision in context of strong performance and good service we have delivered," Keith Skeoch and Martin Gilbert, Standard Life Aberdeen's co-chief executives, said in a statement announcing the review.