Standard Life Aberdeen has been served notice on a £109 billion asset management deal by its biggest client, Lloyds Banking Group, further denting shares in the recently-merged group. 

Clients have pulled billions of pounds in assets in the six months since Standard Life and Aberdeen Asset Management formed one of Britain's biggest asset managers.

The Lloyds mandate represents 17% of SLA's remaining £646 billion under management. 

The £11 billion pound merger triggered the right for Lloyds and Scottish Widows, which is part of the British bank, to review an agreement struck in 2014 for Aberdeen to manage pension assets on behalf of Lloyds' insurance and wealth units as Standard Life is a "material competitor" to both. 

At the time of the merger, SLA said it had agreed with Lloyds to discuss "ways in good faith to build a successful relationship".

In return, Lloyds had committed to keeping its assets invested with SLA for six months. 

The two sides had been discussing the sale to Lloyds of a book of Standard Life's corporate pension business now closed to new customers, four sources told Reuters. Two told Reuters those talks had stalled. 

SLA declined to comment on the talks.

Meanwhile, Scottish Widows has been expanding in corporate pensions and parent Lloyds also has broader ambitions in insurance after buying Zurich Insurance's UK workplace pensions and savings business in October.

"We are disappointed by this decision in context of strong performance and good service we have delivered," Keith Skeoch and Martin Gilbert, Standard Life Aberdeen's co-chief executives, said in a statement announcing the review. 

The mandate, to invest in largely lower margin passive equity and fixed income assets, makes up less than 5%of SLA's revenues, but could still leave a hole of up to £140m in SLA's revenues to be filled, analysts said. 

Scottish Widows and Lloyds said in a statement they had given notice to SLA of their plans to terminate the deal, kick-starting a 12-month process to find a replacement provider or providers. 

SLA said it planned to participate in the process. 

SLA said it would take a one-off impairment charge of £40m.