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Report: Lloyds ended talks with Standard Life Aberdeen over £300B tie-up

Secret discussions over a merger of the life insurance operations of Lloyds Banking Group Plc and Standard Life Aberdeen Plc, involving £300 billion AUM, were terminated in late-2017 due to a disagreement over the ownership structure of the new venture, at least two media organizations reported, citing unnamed sources.

Standard life Aberdeen co-CEOs Martin Gilbert and Keith Skeoch favored the broad terms of the arrangement, according to sources cited by Sky News on Feb. 17. Lloyds would have owned 60% of the new insurance company and Standard Life Aberdeen the balance.

However, Lloyds sought control of the proposed entity in order to consolidate it on its balance sheet while directors of Standard Life Aberdeen wanted to create a stand-alone insurance company, which would have been valued at £5 billion, according to the sources.

Standard Life Aberdeen would be represented on the entity's board while Scottish Widows Ltd. Chairman Nick Prettejohn and Antonio Lorenzo, in charge of Lloyds' insurance and wealth operations, would serve as chairman and CEO of the new entity, respectively, Sky News reported.

The termination of the deal has attracted the City regulators' attention, one of the sources said.

On Feb. 15, Standard Life Aberdeen announced that Lloyds Banking Group and Scottish Widows Group Ltd. informed it that they intend to review their long-term asset management arrangements, including the management of about £109 billion of assets.

However, the announcement did not mention the proposed insurance merger.

Both Sky News and The Sunday Times reported that the failure of the joint venture talks lay behind Lloyds' decision to terminate the fund management contract.