Britain’s Lloyds awards $40bn investment contract to BlackRock

Lloyds said that it would look to agree a strategic partnership with BlackRock to collaborate in alternative asset classes, risk management and investment technology. (Reuters)
Updated 12 October 2018
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Britain’s Lloyds awards $40bn investment contract to BlackRock

  • Award comes after Lloyds said it was yanking £109 billion in assets from current manager Standard Life Aberdeen
  • Lloyds said the BlackRock deal would begin after an arbitration process over the SLA contract termination concludes

LONDON: Lloyds Banking Group has awarded BlackRock a £30 billion ($40 billion) slice of one of Europe’s biggest investment contracts to be invested using the US company’s various index strategies.
The award to the world’s biggest asset manager follows a high-profile bidding competition kick-started early this year after Lloyds said it was yanking £109 billion in assets from current manager Standard Life Aberdeen.
That surprise move followed the £11 billion merger of original manager Aberdeen Asset Management and insurer Standard Life, which Lloyds said made the combined company a material competitor — a charge SLA is currently fighting.
Lloyds said that it would also look to agree a strategic partnership with BlackRock to collaborate in alternative asset classes, risk management and investment technology.
“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,” Antonio Lorenzo, chief executive of Scottish Widows and group director of insurance & wealth, said in a statement.
Lloyds-owned Scottish Widows and Lloyds’ wealth management division contributed assets to the £109 billion mandate with SLA.
“The partnership will ensure that Scottish Widows and the group can deliver good investment outcomes for its customers over the coming years,” Lorenzo added.
Lloyds said the BlackRock deal would begin after an arbitration process over the SLA contract termination concludes or when the existing contract expires, adding that it is confident in its right to end the SLA deal.
SLA, which is seeking £250 million in compensation, declined to comment.
Lloyds said that, after a review by Scottish Widows and Lloyds’ wealth unit of their asset management arrangements, it is also near to announcing plans for the remaining £80 billion in assets and would update the market in due course.
Lloyds has been using the mandate transfer to leverage partnerships with asset managers toward the aim of growing its presence in the insurance and wealth sector — an ambition that formed a key pillar of its most recent three-year strategy, laid out in February.
Already holding a top share of its core banking markets, a push into other sectors offers Lloyds an opportunity for growth it has exhausted in products such as mortgages.
On Monday it confirmed it was in talks with Schroders, one of Britain’s biggest listed asset managers, over a potential deal that would be one of the biggest in wealth management tie-ups in recent years.


Audi fined $925 million in Germany over diesel emissions

Updated 7 min 45 sec ago
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Audi fined $925 million in Germany over diesel emissions

FRANKFURT, Germany: German authorities have fined luxury automaker Audi €800 million ($925 million) for selling cars with excessive diesel emissions.
Prosecutors in Munich said Tuesday that the fine was imposed because Audi neglected its oversight duties in selling cars with engines made by it and group partner Volkswagen that did not conform to legal limits on harmful emissions. The case covered some 4.9 million Audi cars sold in Europe, the US and elsewhere between 2004 and 20018.
In September 2015 parent company Volkswagen admitted rigging some 11 million diesel autos with software that enabled them to pass emissions tests even though emissions in real driving were much higher.
The prosecutors’ statement said the resolution of the case did not affect an investigation of individual Audi executives.