Lloyds and Scottish Widows have terminated their asset management contract with Standard Life Aberdeen (LON:SLA), in the wake of the merger between Standard Life and Aberdeen Asset Management.

Shares in Standard Life Aberdeen fell over 4 percent on the news, with the fund manager set to lose revenue and take a £40 million impairment charge as a result of the relationship loss.

Lloyds, who own life insurance company Scottish Widows, have sent notices to Standard Life Aberdeen seeking to terminate the investment management arrangements. The latter company currently manages £109 billion worth of assets for Scottish Widows.

Keith Skeoch and Martin Gilbert, Standard Life Aberdeen’s chief executives, said: “We are disappointed by this decision in the context of the strong performance and good service we have delivered for LBG, Scottish Widows and their customers. We will be discussing the implications of this with LBG and Scottish Widows.”

Scottish Widows CEO Antonio Lorenzo said the tie up had created a “material competitor” , adding that “it is now appropriate to review our long-term asset management arrangements to ensure they remain up-to-date and that customers continue to receive good service and investment performance.”

The termination is subject to a 12 month notice period.

Standard Life Aberdeen (LON:SLA) shares are currently trading down 4.88 percent at 370.20 on the news (0915GMT).