Need Size to Compete With U.S.: Gilbert

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Nov. 18 (Bloomberg) -- Martin James Gilbert, CEO and Co-Founder of Aberdeen Asset Management, discusses his company’s deal with Lloyds and why size matters in the international market. He speaks on Bloomberg Television’s “On The Move.” (Source: Bloomberg)

As we speak.

Investors seem to like something.

Are you pleased with the deal?

I think it is a great deal for both lloyds and aberdeen.

Especially, the customers of lloyds and aberdeen.

Of course scottish widows which will now be our largest plan.

In the past, only two years ago, you were saying, i don't want any big acquisitions.

This year, you said, i am not interested in swip.

Was it a negotiating tactic or did something make you change your mind?

Accepting the deal we looked at earlier in the dear didn't include the solution.

So, when they included that, we became much more interested in it.

Also strategically, this deal the phils our desire -- fulfills our desire to strengthen our solutions, fixed income and property businesses.

One of the ways to look at it is almost like free acquisitions and a strategic relationship with lloyds.

I think it is a good deal.

Two years ago, you said you don't want any big acquisitions because they will be destructive.

Was it because the deal was so enticing?

Or was it because he realized that bigger sometimes means better?

I think it is a very good deal for both lloyds and aberdeen.

Also, the world has changed in the last two years.

I think you do need to have a certain amount of size to compete with the big americans.

Shredders and ourselves, the rivals are the americans, not each other.

It is really along those lines that we looked at the deal.

Strategically, it fulfills a large number of criteria.

Why is bigger better?

Because investors want to know that you are across everything or because you can command better deals for currency swaps and stuff like that?

It is just competing with the big americans who are giants.

It does help with clients.

Also, profitability helps because the cluster regulation is going up globally.

It is becoming a more and more expensive business.

The cost of retaining your top fund managers is going up.

It all helps.

With this lead to job cuts or restructuring of any kind?

This deal is prefaced on growth.

We started with three of us in aberdeen to over 2000 people.

The whole idea is to grow the two businesses.

There will be some job cuts in areas where there is duplication.

It is not prefaced on taking out cost.

You paid 560 billion pounds -- 560 million pounds.

You may pay further 100 million pounds if there are certain benchmarks, whether you hit the target of this partnership.

Can you give us a flavor of these targets?

The targets are sensitive.

What i would say is we would be delighted to pay this 100 million.

If we do pay, we will have really done well.

Both lloyds and ourselves will really have done well building their wealth management area.

One of lloyds' priorities is this big market share in u.k. banking but a low percentage of wealth management.

They want to grow that.

This deal helps them do that as well.

It is a genius way to structure a deal.

It is like, i will pay you more if you deliver.

It is great, much better than paying upfront.

I think it is great incentive for both parties.

Your stock price has gained some 12.5%. you have just done this huge deal.

Talk to me about your main concerns.

It will be more difficult when tapering starts, right?

Is this kind of the main concern you have in general, how investors will react and how the markets will do?

I think the financial industry is a very fragile business.

You are always looking at the worst-case scenario.

When bond yields start to go up and so on.

I suppose at the end of the day, the big worry you always have is hanging onto your top fund managers.

That is really where we worried the most.

Because -- what are they looking for?

People want to attract the best.

We have got some top fund managers.

They are obviously attractive to other companies.

I think the key is to have an environment where people want to work rather than just be totally reliant on rim iteration.

You are right.

Keeping talent is one of the things that is the most difficult and also the one thing they want to get right.

Overall, what is your biggest challenge for the next two years?

Is it attracting more customers or retaining the top talent?

Always, retaining the top talent is fundamental.

And doing a good job for our customers, that is key.

If we do a good job for our customers, we do well.

Martin, thank you so much.

Chief executive officer of aberdeen asset management.

The pulse is coming up in about 15 minutes.

I am joined by guy johnson.

We have a pretty packed show.

We are talking china, bmw and the dubai air show.

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