Exclusive: Schroders mulling Finalizing Wealth Management Tie-up with Lloyds

A strategic wealth management tie-up between an investment giant and high-street vendor may not be far behind, if the revelation by an U.K.-based multimedia news organization Sky News is to be believed. The broad waves of consolidation in the wealth management sector has seen several wealth management alliance in recent years, both none possibly bigger than this one, opine industry experts.

In a recent announcement, the multinational asset management company Schroders Plc. is mulling over the finalizing strategic partnership with the British commercial bank Lloyds Bank plc. by the end of October 2018. The alliance is likely to see Lloyds Banking Group merging its 13 Bn pound ($17 billion) wealth management arm into a new joint venture (JV) with Schroders. According to a source familiar with the development, the deal will see the high street banker owning 50.1 % of the joint venture, while the other partner will hold the remaining share.

Strategic Alliance to marry Investment Management Capabilities of Schroders with Lloyds’ Distribution Network

The deal if finalized will see a strategic tie-up between the players who are thinking to work in close collaboration in wealth management sector. The alliance will enable Lloyds to leverage technology and investment management capabilities of Schroders to its robust distribution customer network. For long, Schroders has been nursing its ambition to take over largest high street banks of the U.K., the deal offers a suitable framework for the same. Of note, in 2017, wealth management had contributed 273.3 Mn pounds to Schroders’ net income. The alliance will also enable it to target mass affluent demographic in the sector.

Deal to be Three-pronged Strategy

The deal will be on the lines of a three-pronged strategy as it hopes to take 109 Bn investment management contract from Scoottish Widows, a part of the Lloyds Banking Group.

However, both the companies have categorically stated that the alliance will not necessarily lead to any formal agreement, which will be clear only in the next announcement.