Lloyds Banking Group and Schroders struck one of the City’s largest ever wealth management alliances this afternoon, joining forces in a multi-billion pound deal aimed at financial planning for wealthy customers.
As part of the joint venture, Schroders will take on an £80bn investment contract from Scottish Widows, which is owned by Lloyds.
Schroders, which is Britain’s second largest listed fund group by assets under management, said it would combine its investment expertise and technology with Lloyds’s client and distribution network.
Antonio Lorenzo, director of insurance and wealth at Lloyds and Chief Executive of its subsidiary Scottish Widows, said: "The aim is to become a top three UK financial planning business within five years."
The news comes in the wake of Lloyds revealing its intentions in February to ditch Standard Life Aberdeen (SLA), which previously managed the funds.
"Lloyds and Schroders may be tying the knot but there’s still a somewhat acrimonious divorce going on between the high street bank and Standard Life Aberdeen. This creates some uncertainty about when £67 billion of assets may be transferred to Schroder, which could be as late as 2022," according to Laith Khalaf, senior analyst at Hargreaves Lansdown.
Khalaf added: "Part of Lloyds’ new strategy is to expand into the financial planning and retirement market, and the bank is targeting one million new pension customers by 2020. The government’s auto-enrolment programme is now firmly in the rear view mirror, which means Lloyds will have to pinch many of these new customers off someone else, so it needs to sharpen up its toolkit. To that end it makes sense to team up with Schroders who have a wide range of investment capabilities and experience of managing pension assets."
Gleacher Shacklock acted as financial adviser to Schroders.