Industry analyst Ned Cazalet said the writing was on the wall back in October, when Lloyds bought Zurich UK’s pensions and savings business in a deal that added £19bn in assets and 500,000 customers to Scottish Widows.
“The only way it might have worked was for Standard Life Aberdeen to hoover up Widows and all the other bits and pieces around it, that could have been a possibility but clearly didn’t happen,” he said. “They [Lloyds] decided to build the business – the Zurich deal showed the development of thinking.”
Although Gilbert might have been overly gung-ho about the combined group’s future relationship with Lloyds before the merger, analysts said they don’t believe bosses on either side had tried to pull the wool over investors’ eyes to get the deal through the door. As well as being signalled in the prospectus, there was only so much wooing Aberdeen Standard Life could do.
“It really wasn’t up to them,” said Cazalet. “They could be kissy, kissy, lovely, lovely, more roses, more champagne but that only gets you so far. This is a strategic, rather than performance driven [decision]. There will be no shortage of people trying to cut a good deal [to manage Lloyds’ assets].”
Hargreaves Lansdown analyst Laith Khalaf added that while he thinks the loss of the mandate undermines some of the rationale for the asset managers to join forces, given one of the drivers was to fend off competition by scaling up, nobody could pretend they didn’t know about the risks surrounding the Lloyds’ relationship.
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