Santander and Credit Agricole to Create $3.78 Trillion Custodial Bank
April 17 2019 - 6:45AM
Dow Jones News
By Patricia Kowsmann
Spain's Banco Santander SA and France's Credit Agricole SA are
to combine their custody and asset-servicing operations, creating a
EUR3.34 trillion ($3.78 trillion) custodian business with more
scale to compete.
Custodial banks secure assets for clients such as large
institutional investors and fund managers. The joint venture
announced Wednesday comes amid a push for consolidation of European
banks which are struggling with low returns and high costs.
Germany's Deutsche Bank AG and Commerzbank AG are currently in
talks about a potential merger.
The new entity, which is subject to approval, will be the third
largest in the eurozone by assets under custody after France's BNP
Paribas SA and Société Générale SA. However, they are much smaller
than their U.S. peers. State Street Corp., one of the biggest,
finished the year with $31.6 trillion in assets under custody.
Santander's business is relatively small, generating EUR80
million in profit last year. It will transfer its S3 business,
which covers Spain and Latin America and had EUR710 billion of
assets under custody and EUR138 billion of assets under
administration as of Dec. 31, to CACEIS, the asset-servicing arm of
Crédit Agricole. CACEIS had EUR2.6 trillion in assets under custody
and EUR1.7 trillion in assets under administration as of
December.
Credit Agricole recorded a EUR174 million net income from asset
servicing last year. It will hold 69.5% of the entity and Santander
will hold the remaining 30.5%, with the Spanish bank retaining a
majority stake in the Latin American operations. The banks said the
combination will help them seek clients in growth markets like
Latin America and Asia.
"S3 and CACEIS are highly complementary businesses, and by
working together we can create a custody and asset servicing
platform that leverages our collective scale and global presence,"
Santander Chairman Ana Botin said in a statement.
The banks said the impact of the joint-venture on capital and
earnings per share won't be material.
Write to Patricia Kowsmann at patricia.kowsmann@wsj.com
(END) Dow Jones Newswires
April 17, 2019 06:30 ET (10:30 GMT)
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