Britain’s largest retail and commercial bank, Lloyds Banking Group is about to inject its £13bn wealth management arm into a new joint venture with investment management giant, Schroders. The deal is reported to be one of the largest wealth management tie-ups in recent years, amid widespread collaborations in the industry sector.
Sources close to the matter suggest that the partnership would exploit Schroders’ technology and investment management capabilities with Lloyds’ huge distribution network, effectively fulfilling the strategic objectives of both the firms.
As per Reuters, Beth Saint, Schroders’ spokeswoman confirmed that the company will be forming a JV with Lloyds Banking Group with a view of working closely together in parts of the wealth sector, however it is not guaranteed that these discussions will lead to any formal arrangement.
Incidentally, the deal will allow Lloyds 50.1% stakes of the new JV, while Schroders will own the remaining shares. For the record, wealth management contributed £273.3 million to the net income of Schroders in 2017, becoming an area of focus for future growth prospects.
António Horta-Osorio, CEO of Lloyds Bank was quoted saying that, Lloyds, UK’s renowned bank that owns the Halifax network, considers serving its millions of customers with wealth management services a top priority.
Sources claim that the new JV would be part of a three-part tie-up between the companies, with Schroders taking over a £109 billion investment management contract from Scottish Widows, the Lloyds-owned insurance firm. This is apparently is in a disagreement with Standard Life Aberdeen (SLA) and is now subject of an independent arbitration process.
Moreover, the JV would also involve forming an agreement with UK’s prominent wealth management firm, Cazenove Capital, which is expected to bring the total value of overall contracts to about £500 million, with Lloyds taking a 19.9% stake in Cazenove Capital and its wealth management units valued to be roughly about £250m each.