Credit Agricole SA and Societe Generale SA, France’s second- and third-largest banks, agreed to merge their asset management operations as they adapt to the worst financial crisis since the Great Depression.

Credit Agricole will own 70 percent of the entity and Societe Generale 30 percent, the Paris-based banks said in a statement.
The combined business had 638 billion euros ($827 billion) under management on Sept. 30, and will rank fourth in Europe, the companies said. They didn’t provide a value for the deal.
“In the new landscape that is taking shape, the banking industry needs to rethink its models,” Credit Agricole Chief Executive Officer Georges Pauget, 61, said in the statement.
Societe Generale and Credit Agricole are combining the fund activities as plunging asset prices and rising client redemptions weigh on profit across the money management industry. The two banks estimate that merging the operations will lead to cost savings of 120 million euros annually by the third year.
The units operate in 37 countries and had 1.8 billion euros of annualized sales and 900 million euros of operating income last year, the banks said. The two companies joined their brokerage firms last year to create Newedge.
French President Nicolas Sarkozy agreed last week to provide 10.5 billion euros to the nation’s largest banks in a second round of aid aimed at spurring them to lend. Sarkozy’s government is also pushing Groupe Banque Populaire and Groupe Caisse d’Epargne to merge to create France’s second-largest bank by branches.
Yves Perrier, the head of Credit Agricole Asset Management, will lead the new entity as chief executive officer. Credit Agricole will name the chairman and Societe Generale the vice- chairman.
Jean-Pierre Mustier, who left the top job at Societe Generale’s investment-banking unit last year following a record trading loss, helped negotiate the deal after becoming head of asset management in October.
Credit Agricole will merge all its asset management operations into the new entity, while Societe Generale will bring its European and Asian fund businesses as well as 20 percent of its U.S. asset-management unit TCW. Societe Generale Asset Management Alternative Investments and Lyxor won’t be part of the combined entity.
Societe Generale Asset Management had a 7 million-euro operating loss in the third quarter. The unit had more than 3,000 employees and 298 billion euros under management on Sept. 30.
Credit Agricole Asset Management had 460 billion euros under management at the end of September and a staff of more than 2,272, the company said.
(Source: Bloomberg)