Scottish Widows has awarded the contract to manage £30 billion in passive index strategies to BlackRock, under the terms of a wider collaboration agreement on alternative assets and tech.
The agreement follows the group’s decision at the beginning of the year to pull a £109 billion contract from Aberdeen following the company’s merger with Standard Life.
Standard Life Aberdeen (SLA) is currently pursuing arbitration. Scottish Widows parent Lloyds said that the funds would be transferred ‘upon conclusion of the current arbitration process… or when the existing contract expires’ and said it expects to receive a ruling early next year.
It added that it hoped to be able to finalise a decision on the remaining £80 billion in assets shortly.
In addition to running a significant chunk of Scottish Widows’ pension assets, the company said it would sign ‘a strategic partnership with BlackRock including collaboration in alternative asset classes, risk management and investment technology’.
Scottish Widows chief executive Antonio Lorenzo said: ‘BlackRock has been selected following a competitive tender process in which it clearly demonstrated its global market leading capabilities and deep expertise in the UK market.
‘The partnership will ensure that Scottish Widows and the group can deliver good investment outcomes for its customers over the coming years.’
BlackRock had earlier been reported to have been cut out of negotiations for the assets after Lloyds signed a £13 billion joint venture deal with Schroders establishing a wealth management partnership as part of a multi-part agreement, including the transfer of the pension funds.
Alongside the two major fund houses Lloyds has signed terms with, JP Morgan and Goldman Sachs have also been reported to be in the running.
The contract was awarded to Aberdeen in 2014 as part of the sale of Scottish Widow’s investment division. The deal was rescinded when Lloyds judged that the merger of the pure asset manager with the diversified insurance business of Standard Life turned the combined group into a material competitor.
The decision immediately wiped out 4.4% of SLA's group revenue, or £129 million. While the group insisted that the decision was long-coming, the loss added an additional urgency to its announcement just a week later that it would sell its insurance arm to Phoenix for £3 billion.