SocGen, Credit Agricole to Combine Asset Management Divisions

Societe Generale and Credit Agricole have signed a preliminary agreement to merge their asset management arms and create a top 10 global player, the French banks said on Monday.

The new company will be 70 percent owned by Agricole and 30 percent owned by SocGen.

According to proforma figures from September 30, 2008, the new entity would have 638 billion euros (600 billion pounds) of assets under management. It would have revenues of 1.8 billion euros and an operating profit of 900 million euros.

Agricole and SocGen said their combined asset management company would be the fourth-biggest in Europe in terms of assets under management, and would be the ninth-biggest in the world.

The banks added that the deal was expected to boost earnings and would result in 120 million euros of cost synergies every year over a three-year period.

The SocGen/Agricole deal is the latest example of consolidation in the asset management industry, as fund managers face a withdrawal of clients’ money and writedowns caused by the global financial crisis.

Last month, SocGen sold its UK asset management division to hedge fund company GLG Partners and struggling British company New Star Asset Management has also attracted takeover interest.

SocGen shares closed down 6 percent at 27.25 euros on Friday while Agricole finished down 0.5 percent at 7.58 euros.

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