Lloyds Banking Group is set to pay Standard Life Aberdeen £140m to settle their dispute over a £100bn fund management contract, after an arbitration panel said the bank was not entitled to pull out of the arrangement.
The settlement, expected to be finalised later this week, will conclude an 18-month battle between the two financial institutions, Sky News first reported.
Under the agreement, the UK bank will pay out £140m and the Scottish fund manager will continue to manage around £30bn of assets on behalf of Lloyds for three years.
The dispute centres on £109bn that Edinburgh-based investment house Aberdeen Asset Management had managed for Lloyds' wealth management arm and Scottish Widows, its life insurance and pensions business.
The bank scrapped the contract when after Standard and Aberdeen merged but a tribunal in March ruled the bank shuld not have taken that action. Lloyds claimed the merger meant there was a conflict of interest with its Scottish Widows life and pensions arm, which had been using Aberdeen to manage the mandate.
The loss of the contract, which represented around 17% of SLA's assets, also blew a 4% hole in the company's fee revenue during a period of sustained retail redemptions.
Aberdeen had managed the funds for Lloyds subsidiary Scottish Widows since 2014.
Approached by Sky, both Lloyds and SLA declined to comment. The preliminary agreement, reportedly due to be finalised later this week.