Banco Santander SA in Talks to Buy Back 50% Stake in Asset Management Unit

Banco Santander SA is in talks to buy back the 50% stake in its asset-management unit that it sold to two private-equity firms in 2013, according to people familiar with the situation.

Santander sold half of Santander Asset Management to Warburg Pincus LLC and General Atlantic 3½ years ago in a transaction that valued the unit at €2 billion ($2.2 billion). The deal generated a net capital gain of €700 million for Santander, the Spanish bank said at the time. The asset-management unit had €173.6 billion of assets under management as of June 30 and more than 700 staff, mostly in Europe and South America.

The two U.S. private-equity firms are discussing the sale of their stake in Santander Asset Management, following a decision in July by Santander and Italy's UniCredit SpA to end a plan to merge their asset-management units.

When the merger with UniCredit's Pioneer Investments unit was announced in 2015, Santander said the deal valued its asset-management unit at €2.6 billion. The combination with Pioneer would have created a firm with a €353 billion under management.

In scrapping the deal, UniCredit said regulatory issues made it impossible to find a "workable solution within a reasonable time horizon."

Santander Asset Management was among billions of dollars of assets that private-equity firms acquired from banks as lenders sought to raise cash in the wake of the global financial crisis. General Atlantic and Warburg Pincus have worked together on other transactions, including last year's acquisition of a 49% stake in Dubai-based payments-processing company Network International.

In the past couple of years, European banks have stepped up their focus on selling asset-management products, which generate fees and commissions that have helped to boost profitability as lenders cope with rock-bottom interest rates and sluggish demand for loans.

Santander Chief Executive José Antonio Á lvarez said the merger with Pioneer would have allowed the lenders' asset managers to offer a wider range of products.

Write to Simon Clark at [e-mail] and Jeannette Neumann at [e-mail]

(END) Dow Jones Newswires

November 02, 2016 15:55 ET (19:55 GMT)

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