AT FACE value the loss of the mandate to run £109 billion of assets for Scottish Widows is a major blow for Standard Life Aberdeen - and one that calls into question the rationale for the £11bn merger that created the business last year.

The purpose of bringing together Aberdeen Asset Management and Edinburgh’s Standard Life was, after all, to help stem the seemingly endless outflow of funds both businesses were experiencing.

Now, as a direct result of that deal, the enlarged firm is not only going to have to kiss goodbye to its largest client but to 15 per cent of the assets it manages too.

Yet the fact that most of the Scottish Widows cash is invested in cheap-to-run passive strategies is likely to soften the blow, with the 15 per cent reduction in assets expected to result in just a five per cent contraction in revenues and eight per cent drop in profits for Standard Life Aberdeen.

That may be small beer for a firm that turns over £2.8bn, but what could be harder to swallow is the feeling that Scottish Widows has somehow managed to steal a march on Standard Life, its arch rival since both were founded in the early part of the 19th century.

The terms of Aberdeen’s original contract with Scottish Widows mean the situation is undoubtedly of Standard Life Aberdeen’s own making.

Resolving it will lead to a necessary reduction in its business, though, whether that means losing the Scottish Widows’ work or offloading its own pensions arm in order to keep it.

Whichever way you look at it, then, this is perhaps not so much Standard Life’s loss as Scottish Widows’ gain.