Lloyds Banking Group PLC and unit Scottish Widows Group Ltd. have picked U.S.-based BlackRock Inc. to manage £30 billion of assets in index strategies.

The assets are part of the £109 billion investment portfolio put up for grabs after Lloyds decided to terminate the contract of its current manager, Standard Life Aberdeen PLC.

BlackRock will begin managing the assets following the conclusion of the arbitration process with Standard Life Aberdeen regarding the management of the investment portfolio — expected to take place in early 2019 — or when the existing contract expires, Scottish Widows said.

In addition to the £30 billion asset management mandate, Lloyds is also pursuing a strategic partnership with BlackRock that includes collaboration in alternative asset classes, risk management and investment technology.

The British banking group is also close to finalizing arrangements in respect of the mandate of the remaining £80 billion of assets and will provide an update in due course, Scottish Widows said.

U.K. asset manager Schroders PLC earlier confirmed that it is in discussions with Lloyds to work "closely together in parts of the wealth sector" following reports that Schroders is in talks with Lloyds for the mandate of a bigger chunk of the portfolio.

Sky News reported Oct. 7, citing a source close to the deal, that Lloyds is finalizing plans to merge its £13 billion wealth management unit into a new joint venture with Schroders as part of a roughly £500 million three-pronged deal. Schroders reportedly offered Lloyds a 19.9% stake in unit Cazenove Capital Management Ltd. as part of the agreement, which is expected to be announced later in October, according to the report.