FRANCE - Crédit Agricole and Société Générale, France's second- and third-largest banks, have signed a preliminary agreement to merge their asset management operations, for an undisclosed sum.
Société Générale stressed Lyxor Asset Management will remain within the group, and SGAM AI, the alternative management arm, will be folded into Lyxor.
The news follows Société Générale Asset Management (SGAM) earlier sale of its London-based asset management subsidiary to hedge fund specialists GLG Partners Inc for an undisclosed sum. (See earlier IPE story: Hedge fund specialists to buy SGAM UK)
French media had been speculating about the tie-up on Friday, though it was only this morning when the two banks issued out a joint statement confirming they had agreed to combine Crédit Agricole Asset Management (CAAM) and the European and Asian activities of SGAM, as well as 20% of TCW, its asset management subsidiary in the US.
Yves Perrier, currently chief executive of CAAM, will become the head of the new entity, of which Crédit Agricole will own 70% and Société Générale the remaining 30%.
The combine business had €638bn of assets under management (AuM) dated to 30 September 2008, so will rank fourth in terms of size in Europe, the two banks said.
"For institutional clients, the strong complementarily of relative strengths of the separate businesses will significantly strengthen the combined entity," said the two firms in a statement.
The combined entity could consider a stock exchange listing with in a five-year timeframe.
Georges Pauget, chief executive of Crédit Agricole, further commented: ""Given the rapidly evolving financial services sector landscape, banks are having to review their business models. The agreement we have signed with Société Générale is based on industrial logic, seeking to combine production efficiency with the power of distribution."
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