BlackRock has struck an asset management agreement with Lloyds Banking Group subsidiary Scottish Widows to manage £30bn of passive index strategies.

“BlackRock has been selected following a competitive tender process in which it clearly demonstrated its market leading capabilities in passive strategies which will ensure that we can continue to deliver excellent service and investment performance for our customers,” Scottish Widows said in a statement.

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The move follows Lloyds’ and Scottish Widows’ decision to terminate a £109bn asset management contract with Aberdeen earlier this year.

The decision was taken due to competition issues triggered by Aberdeen’s merger with Standard Life in August 2017, leading to the creation of Standard Life Aberdeen (SLA).

SLA challenged Lloyds’ decision to terminate the contract and is currently undergoing an arbitration process.

Lloyds said that it is confident in its rights to scrap the existing asset management contract and expects the arbitration to be wrapped up by early 2019.

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Blackrock will start running the assets following completion of the process or after the expiration of the current contract with SLA.

Scottish Widows also noted that it is “near to finalising arrangements” for the balance £80bn of assets in question.

At the same time, Scottish Widows and BlackRock also plan to pursue an alliance in alternative asset classes, risk management and investment technology.