Goldman Sachs’ foray into UK retail banking has reportedly put its asset management division (GSAM) out of contention for a £109bn ($140m, €121m) Lloyds contract.
The FTSE 100 bank views Goldman Sachs’ challenger bank Marcus as a competitor, which leaves Blackrock and Schroders vying for the contract, UK newspaper the Financial Times reported.
Marcus began accepting UK deposits last month.
Competition concerns were the very reason Lloyds yanked Standard Life Aberdeen from the mandate in February following Aberdeen Asset Management’s merger with Standard Life, a rival of Lloyds’ subsidiary Scottish Widows.
Goldman Sachs declined to comment.
Blackrock versus Schroders
GSAM had advanced to the second stage of bidding for the Scottish Widows contract alongside JP Morgan Asset Management (JPMAM), Blackrock and Schroders.
JPMAM has since dropped out of the race, a source told the Financial Times.
Both Blackrock and Schroders have the necessary resources and range of products to suit to such a large mandate, a source said. Lloyds could even split the contract giving the active funds to Schroders and passive investments to Blackrock.
The account remains a big win even if it is split, said Adrian Lowcock, head of personal investing at Willis Owen.
“Lloyds are clearly seeking a long term partner which does not conflict with their interests – one of the reasons for removing Standard Life Aberdeen in the first instance. The remaining companies involved – Blackrock and Schroders – are large well established names with a strong focus on performance and value for money.”
Blackrock and Schroders declined to comment.
Standard Life Aberdeen snubbed
Though Standard Life Aberdeen participated in the first round of bidding it did not advance to the next round.
The asset manager has been fighting to keep its contract, which it had run since 2014 and was due to expire in 2022. It has challenged Lloyds’ decision to terminate the contract early by the first half of 2019 and has denied that it is a material competitor to Scottish Widows.
Losing the £109bn mandate has been a major blow to Standard Life Aberdeen as it sheds insurance roots and restructuring itself as a ‘capital lite’ investment group. Its investment arm Aberdeen Standard Investments has continued to hemorrhage money post merger with £19.2bn of redemptions over the first half of 2018.
Lloyds is expected to make a decision by the end of the third quarter.
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