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Changes within our investment management business

On Monday 18th November 2013, Lloyds Banking Group (the ‘Group’) announced that, having conducted a strategic review of its investment management activities, it had concluded that another owner would be better able to develop and commercialise further the strong capabilities that exist within Scottish Widows Investment Partnership (SWIP).

As a result, the Group agreed to sell SWIP to Aberdeen Asset Management (‘Aberdeen’). The sale was completed on Monday 31st March 2014. The Group received shares in Aberdeen and may receive additional deferred payments in cash, conditional on the performance of the relationship over a period of years.

The sale only involves the Group’s asset management business and does not directly impact Scottish Widows, which continues to manage the Group’s life, pensions and investments business. In time, following a transitional period, the SWIP brand will no longer be used.

Importantly, as part of the sale agreement the Group and Aberdeen have entered into a long-term strategic asset management relationship whereby Aberdeen manages assets on behalf of the Group, including Scottish Widows’ own funds. This means that you do not need to take any action as a result of the sale and there is no change to the name of the funds you invest in or their aims, risks and objectives – this applies to all relevant investments through Scottish Widows, Scottish Widows International, Clerical Medical, CMI Insurance Company Limited, Halifax, Bank of Scotland and Lloyds TSB products.

The combined investment capabilities of SWIP and Aberdeen will result in a stronger asset management offering and a more diversified range of global investment capabilities for our customers. As one combined business, Aberdeen aims to strengthen and deepen its alliance with the Group, including our Insurance business, while continuing to focus on delivering outstanding asset management solutions for our customers.

The way you do business with us does not change and there is no change to the service we provide to you.

Your questions answered

We’ve listed some questions and answers that you might find helpful.

What has been announced?

Lloyds Banking Group (the “Group”) has completed the sale of Scottish Widows Investment Partnership (SWIP) to Aberdeen Asset Management. As part of the transaction, the Group received shares in Aberdeen and may receive additional deferred payments in cash, conditional on the performance of the relationship over a period of years.

The sale only involves the Group’s asset management business and does not directly impact Scottish Widows, which continues to manage the Group’s life, pensions and investments business. In time, following a transitional period, the SWIP brand will no longer be used.

What is the impact on my investment – will there be changes?

There is no immediate impact on, or change to, the products or the funds you invest in. As part of the sale agreement the Group and Aberdeen have entered into a long-term strategic asset management relationship whereby Aberdeen continues to manage assets on behalf of the Group.

We will of course inform you of any changes that impact you.

Will I still be able to find fund prices, if so where can I find these?

Prices will continue to be available online at our fund prices and via the usual third party providers.

What happens to the funds that I have invested in and will the fund names change?

Robust plans are in place to manage the transfer process. In the meantime, there are no changes to fund objectives, fund structure or the way you do business with Scottish Widows. Scottish Widows funds continue to be owned by Scottish Widows with Aberdeen managing the underlying assets on behalf of the Group.

We will of course inform you of any changes that impact you.

Why is this happening now? What is the rationale behind this decision?

In June 2011, Lloyds Banking Group Chief Executive António Horta-Osório set out the Group’s objective of becoming the best bank for customers and creating shareholder value through simplification. Following this, the Group has, for some time, been working with SWIP to determine the best outcome for the asset management business – being mindful of both the Group’s ambition to be the best bank for customers and SWIP’s focus on delivering for investment clients, including Scottish Widows. This review has concluded that another owner would be better able to develop and commercialise further the strong capabilities that exist within SWIP.

Is the Group looking to sell Scottish Widows?

The sale only involves the Group’s asset management business and does not impact Scottish Widows, which continues to manage the Group’s life, pensions and investments business.

Indeed, the Scottish Widows brand has just been relaunched. This significant investment includes an innovative approach to bring protection and retirement planning to the forefront of our customers' minds, and the introduction of a new Widow, model Amber Martinez.

Who should I speak to for further advice in relation to my investment?

We cannot give financial advice. If you need advice we recommend that you speak with a financial adviser. If you don’t have a financial adviser, please visit www.unbiased.co.uk for details of UK Independent Financial Advisers. There may be a charge for this advice.

Are the associated costs of this work being passed on to customers?

No.

Who will provide fund performance information going forward?

You should see no change in the availability of fund information. The funds that are linked to Scottish Widows products are owned by Scottish Widows and we will continue to provide performance information through our usual communication routes and to third party information providers. Fund information can be found at our fund prices.

What can you tell me about the new Fund managers, what is their track record like; will they deliver better/worse returns? What happens to the current Fund managers?

SWIP was sold to Aberdeen under a Share Purchase Agreement (SPA). This means the entire business transfers to Aberdeen, including all colleagues.

You can find out more about Aberdeen at: www.aberdeen-asset.co.uk