Partnership announced by Schroders and Lloyds

Schroders and Lloyds announce that they are entering into a strategic partnership to create a wealth management proposition. The joint venture is planned to commence activities in 2019.

This strategic partnership will combine Schroders' investment and wealth management expertise and technology capabilities with Lloyds' client base, multi-channel distribution and digital capabilities. For Schroders, the partnership will continue its expansion into the UK wealth management market. For Lloyds, the partnership is in line with the strategic objectives outlined in its latest strategic review and will accelerate the development of its Financial Planning and Retirement business.

Financial Planning
A new financial planning joint venture company ('JV') for affluent customers will be established by Lloyds and Schroders. Lloyds will own 50.1% of the share capital and Schroders the remaining 49.9%. Approximately £13 billion of assets and associated advisers from its existing Wealth Management business will be transfered by Lloyds to the JV. The JV aims to commence activities by the end of H1 2019 and will be led by a management team comprising representatives from both partners. From completion, Antonio Lorenzo, Chief Executive of Scottish Widows and Group Director of Insurance & Wealth will be Chairman and James Rainbow, Schroders' Co-Head of UK Intermediary, will be Chief Executive.

Investment Management
In connection with the transfer of the £13 billion of assets to the JV and Schroders taking 49.9% of the JV, Lloyds will receive up to a 19.9% financial investment in the holding company of Schroders' UK wealth management business. Lloyds will also transfer approximately £400 million of existing private client assets under management to Schroders' UK wealth management business. Schroders will be appointed as the active investment manager of approximately £80 billion of the Scottish Widows and Lloyds insurance and wealth related assets (which includes the £13 billion to be transferred to the JV and the £400 million to be transferred to Schroders' UK wealth management business), following Lloyds' asset management review announced in February 2018. This appointment will be for at least five years.

Lloyds remains confident in its rights to terminate the current asset management agreements and expects the arbitration process to conclude early next year. The management of £67 billion of Scottish Widows insurance related assets will commence following conclusion of the current arbitration process with Standard Life Aberdeen or by no later than when the existing contract ends in March 2022. The management of the £13 billion of wealth related assets and the £400 million of existing private client assets will transfer to Schroders as soon as possible following the arbitration process, irrespective of the outcome. Lloyds and Schroders have also agreed to work together and potentially develop other strategic opportunities, including investment propositions and advice for Lloyds' retail customers, for which Schroders would provide active asset management services.