BT and Standard Life Aberdeen / Lloyds

Friday, June 8, 2018 - 09:27

“The FTSE 100 looks set to end the week on a sour note with the blue chip index trading 0.7% lower on Friday morning at 7,650. The market is focused on the start of the G7 summit and for any signals regarding trade talks,” says AJ Bell Investment Director Russ Mould.


“Shareholders in BT have lost 24% of the value of their investment in the telecoms giant since Gavin Patterson became chief executive on 10 September 2013, even after factoring in dividends. It’s therefore of little surprise that the board have finally decided to replace Patterson.

“The business has suffered from intense competition, a large pension deficit, a struggling global services business and regulatory pressures which forced it to cut landline prices. On top of that BT has had to contend with the prospect of political pressure to invest in faster broadband.

“Once an attractive income stock with decent dividend growth, BT has now put dividend growth on hold – something that will not have gone down well with already disgruntled shareholders.

“A new strategy is in place to revive the business but the board clearly feel Patterson is not the person to oversee turnaround efforts. The fact that BT’s share price went up on news of the CEO’s impending exit would suggest that investors and the market as a whole agree that new blood is required to rejuvenate what used to be a highly respected business.”

Standard Life Aberdeen / Lloyds

“Asset manager Standard Life Aberdeen has been struck a second blow by Lloyds Banking Group, suggesting their relationship is no longer an amicable one.

“Having lost a contract in February to managed Lloyds’s £109bn Scottish Widows portfolio, Standard Life Aberdeen has now lost Lloyds as a major shareholder after the bank sold its 3.3% stake in the business.

“The decision by Standard Life Aberdeen last month to launch a contract dispute process over the Scottish Widows deal is likely to have angered Lloyds. Indeed, the latter has said it was disappointed by comments from the asset manager.

“This disagreement will no doubt have influenced Lloyds’ decision to withdraw its money invested in Standard Life Aberdeen.”

These articles are for information purposes only and are not a personal recommendation or advice.

The daily market update is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.