Santander renegotiates UniCredit fund manager deal

Ana Botin, Banco Santander's executive chairman, has renegotiated a merger of the Spanish bank's asset management business with that of Italy's UniCredit by stripping out any US activities to avoid provoking American regulators.

The deal, valuing the merged group at about €5.5bn, is expected to be signed this weekend and be announced next week, according to a person familiar with the situation. It creates a top-10 European group with more than €400bn under management.

Talks on merging Santander Asset Management and UniCredit's Pioneer Investments unit started last year, but were disrupted by the death of Emilio Botin last September after more than a quarter century in charge of the Spanish bank and his succession by his daughter.

Initially, Santander had planned to structure a deal for all of Pioneer. But after Ms Botin took over, she "put her stamp" on the transaction to split off the US activities of Pioneer into a separately owned operation, according to the person.

The Spanish bank will own a third of the merged group's non-US operations, as will UniCredit and the US private equity tandem of Warburg Pincus and General Atlantic.

However, Pioneer's US operation will be in a separate unit jointly owned by the Italian bank and the US private equity groups. All parties declined to comment or could not be reached.

The new structure underlines Ms Botin's determination to repair the Spanish bank's strained relations with US authorities after it last month became the only foreign bank to fail the US stress test twice in a row.

Ms Botin has identified Santander's US operations as a priority since she took charge of the bank, which was last year criticised by the Federal Reserve for paying an unauthorised US dividend.

The Santander boss judged that in such circumstances an expansion of its US operations through a merger with Pioneer was likely to have worsened relations with American authorities.

The deal, which still needs regulatory approval, will create a group with almost half its assets in Europe - predominantly Spain and Italy - almost a third in Latin America and 5 per cent in Asia. The separate US subsidiary will represent about a fifth of the group by assets.

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Warburg Pincus and General Atlantic acquired a 50 per cent stake in Santander Asset Management in 2013.

UniCredit tried to sell Pioneer four years ago, but shelved the sale after Federico Ghizzoni took over as chief executive from Alessandro Profumo in 2010.

Several European banks have sold their asset management businesses recently, including Lloyds Banking Group and Barclays, to meet tighter regulatory capital requirements and repair their balance sheets.

The deal is the latest disposal by UniCredit, which last year completed the public listing of Fineco, its online consumer finance bank, and UniCredit Credit Management Bank, its debt collection business.

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