Lloyds had awarded Aberdeen Asset Management the mandate to run these assets for its subsidiary Scottish Widows.
But the bank served notice last February that it was terminating this agreement early, following Aberdeen’s merger with Standard Life.
It said the new combined group was now a material competitor to Lloyds. This contract was initially due to run until 2022.
The protracted legal row between Lloyds and SLA went to a tribunal, who have now ruled in SLA’s favour.
Standard Life Aberdeen’s chief executive Keith Skeoch says: “Now that the arbitration panel has ruled in our favour, we will carefully consider our next steps, working constructively with LBG to bring the matter to resolution.”
The company added it was “carefully considering the terms of the decision and the appropriate next steps”.
Lloyds had previously announced this mandate would be split between BlackRock and Schroders – the latter of which it has set up a wealth management joint venture. It is understood it still plans to press ahead with these plans.
A spokesman for Lloyds Bank-owned Scottish Widows said:“We are disappointed with the decision of the arbitration tribunal, and will look to discuss its outcome with Standard Life Aberdeen.
“We will discuss starting the process of an orderly transfer of assets to our new partners, BlackRock and Schroders,” he added.
Hargreaves Lansdown senior analyst Laith Khalaf adds: “This is a big victory for Standard Life Aberdeen, and a serious setback for Lloyds’ new foray into wealth management.
“While this is relatively low margin business for Standard Life Aberdeen, it’s clearly a large sum of money, and against a backdrop of fund outflows, will be particularly well-received. A big part of the rationale for the merger between Standard Life and Aberdeen was built on scale, which £100 billion of assets clearly speaks to.”
He points out that Lloyds has already ear-marked the lion’s share of these assets to form the basis of its new joint venture with Schroders, and has also hired Blackrock to manage some passive strategies.
Khalaf adds: “Negotiations will now begin between Standard Life and Lloyds to find some sort of resolution. This could involve Standard Life Aberdeen remaining as manager of the assets until 2022, or Lloyds stumping up some cash for breaking the agreement early.”
He predicts that the bank will take a “mix and match” approach to resolve this issue.