Lloyds sells SWIP to Aberdeen for 660 million pounds LONDON (Reuters) - Lloyds Banking Group PLC (LLOY.L) is selling its fund management arm Scottish Widows Investment Partnership to Aberdeen Asset Management (ADN.L) for around 660 million pounds ($1.1 billion). The transaction will add 136 billion pounds of assets to Aberdeen's books, making it the biggest listed fund manager in Europe with assets under management of around 340 billion pounds. Lloyds said on Monday Aberdeen will pay for the transaction in 132 million shares, or 9.9 percent of the company, worth around 560 million pounds. The deal also includes a further 100 million pounds in cash to be paid over five years depending on the performance of a strategic relationship between the two firms whereby Aberdeen will manage assets on behalf of the banking group. We are confident that this transaction will deliver considerable additional value to our expanded client base and this will therefore benefit our shareholders. I am delighted to welcome Lloyds as a major shareholder," Aberdeen Chief Executive Martin Gilbert said in a separate statement. Lloyds, which is 33 percent owned by the UK government, is selling off non-core assets to strengthen its balance sheet and focus on lending to British households and businesses. The bank is also looking to bolster its capital, in order to plug an 8.6 billion pound shortfall identified by Britain's financial regulator in June and persuade Britain's financial regulator to let it start paying dividends again next year. Lloyds said on Monday the sale would increase its core tier 1 capital by 11 basis points. It had a core tier one capital ratio of 9.9 percent at the end of the third quarter. The banking group said it "intends to be a supportive shareholder" in Aberdeen and has agreed lock-up arrangements, keeping its initial shareholding for at least one year. Reporting by Chris Vellacott and Matt Scuffham