Schroders and Lloyd's Wealth Arms Confirm Joint-Venture Talks

Schroders and Lloyd’s Banking Group have confirmed they are in talks to form a wealth-management alliance. 

First reported by Sky News, the firms have outlined intentions to forge greater ties by moving the bank’s £13 billion ($17 billion) wealth-management arm into the joint venture. According to reports, Lloyd’s would use the merger to harness Schroders’ technology and investment-management capabilities, and in turn, enable the asset manager to benefit from Lloyd’s distribution network.

Wealth management has been a growth area for Schroders in recent years, with an eight percent rise in net income to £143.8 million ($187.7 million), according to its 2018 half-year results.

Both firms provided similar statements to WatersTechnology, in which they confirmed that talks are ongoing and that a deal is yet to be finalized.

Schroders states that it is “in discussions with Lloyds Banking Group PLC with a view to working closely together in parts of the wealth sector. Discussions are ongoing and there can be no certainty that these discussions will lead to any formal arrangement being entered into.”

Sky News reported that, under the three-piece deal, the UK-based asset manager, which has £449.4 billion ($586.3 billion) in assets under management, will to agree a £109 billion ($142.2 billion) investment-management contract for Lloyd’s Scottish Widows, previously managed by its rival, Standard Life Aberdeen. It is expected that Lloyds will have ownership of 50.1 percent of the joint venture, with Schroders owning the remaining 49.9 percent. In the final part of the agreement, Sky reported that Lloyds will acquire a 19.9 percent stake in Schroders’ fund-management subsidiary, Cazenove Capital, which it acquired in 2013, creating one of the UK’s largest private banks and wealth-management houses at the time.

Neither firm would discuss the details of the discussions underway, and instead stated that “further announcements will be made when appropriate.”