Scottish Widows and Lloyd’s Banking Group's wealth businesses have terminated over £100bn worth of partnership agreements with Standard Life Aberdeen.

The contract, which the two signed after the sale of Scottish Widows Investment Partnership in 2014, held a clause which allows the Lloyds’ businesses to terminate the contract “in the event that Aberdeen was subject to a change of control with a material competitor”.

Aberdeen completed a merger with Standard Life in August 2017 and Scottish Widows and the wealth businesses agreed to delay the decision for six months following the completion of the merger, but the two parties failed to reach an agreement to move forward.

Scottish Widows chief executive, Antonio Lorenzo, said: “Given the merger of Standard Life and Aberdeen has resulted in our assets being managed by a material competitor, it is now appropriate to review our long-term asset management arrangements to ensure they remain up-to-date and that customers continue to receive good service and investment performance.

“Therefore, we will begin an in-depth assessment of the market to identify a long-term strategic partner, or partners, to manage the current £109bn of assets.”

In a statement, Lloyds Banking Group said Aberdeen has delivered a good service and would welcome their participation in the review if Standard Life Aberdeen “is able to resolve the competition issue”.

The group said the change will cause “no immediate change” for customers and new arrangements will be implemented by the end of H1 2019.

However, Hargreaves Lansdown senior analyst, Laith Khalaf, believes finding new suitors may be tricky as many will have a presence in the workplace pensions market.

Khalaf said: “This is a blow for Standard Life Aberdeen, but has been on the cards ever since the merger. Standard Life and Scottish Widows are long standing rivals, and the prospect of one group managing the fund range of the other was never going to sit entirely comfortably in the corridors of power in Edinburgh.

“However while almost a fifth of Standard Life Aberdeen’s assets look like they might be walking out the door, this only equates to 5 per cent of revenues, as these investment services are relatively low margin."

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