Labelled as one of the biggest mandates of its kind, a decision by Lloyds is expected in the third quarter, sources close to the matter told Bloomberg.
A spokesperson for the bank declined to comment when contacted by our sister publication Portfolio Adviser.
Russ Mould, investment director at AJ Bell, said: “Schroders and Blackrock are huge firms and both have the resources and range of products which would be suited to such a large piece of business.
“It may be that Lloyds does choose to split the funds and if so it will be interesting to see if Lloyds plans to use Schroders for active funds and Blackrock for passive ones, through iShares, given the ongoing rise in the popularity of passive investment – although Blackrock does have a huge range of active funds, too.”
Earlier this year, Lloyds invited bids for the contract, after it decided to terminate the agreement with the merged Standard Life Aberdeen (SLA) to manage £109bn of assets on behalf of the bank’s Scottish Widows insurance business.
Although the two groups were in discussions about what to do with the contract in the six-month interim period before Standard Life’s merger with Aberdeen, the FTSE 100 bank ultimately scrapped the deal on the basis the unified group had become a “material competitor”.
Lloyds has asked to terminate the agreement by the first half of 2019, ahead of its 2022 expiration date.
SLA challenged the bank’s decision in May.
The asset manager claims Lloyds and its subsidiaries, including Scottish Widows, do not have the right to terminate the long-term asset management arrangement, as it does not pose a competitive threat to the bank’s UK operations.
Mould said: “Losing this deal is a big blow to Standard Life Aberdeen, given its commitment to fund management and desire to withdraw from insurance, so it will naturally be a boost for any firm which wins this enormous mandate.”
Portfolio Adviser reached out to Blackrock and Schroders but both asset managers declined to comment.
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