Ana Botín who is Banco Santander, S.A. (ADR) (NYSE:SAN) executive Chairman renegotiated a merger deal of the asset management business with Italy’s UniCredit. It stripped out any U.S. activities to stay away from provoking American regulators.
The merger deal, valuing the merged entity at almost €5.5 billion, is expected to be finalized this weekend and announced next week. It will result in a top-ten European group with over €400 billion under management.
The talks on merging UniCredit Pioneer Investments and Santander Asset Management commenced in 2014 but were disrupted by the demise of Emilio Botín in September 2014. Previously, Santander had intended to structure a merger deal for all of Pioneer. But after Botín’s daughter took over, she opted for the deal to split off the U.S. activities of Pioneer into a distinct owned operation. The bank will own a third of the combined group’s non-U.S. business. Pioneer’s U.S. business operation will be in a distinct unit jointly owned by the US private equity groups and the Italian bank.
The new merger deal structure highlights Ms Botín’s determination to revamp the Spanish bank’s disrupted relations with U.S. authorities. It was the only foreign bank that didn’t pass the U.S. stress test two consecutive times. She identified Santander’s operations in the U.S. as a priority task since she took realm of the bank.
The Santander boss considered that in such a scenario an expansion of the company’s U.S. operations through a merger deal with Pioneer was likely to have dampened relations with American authorities. The two parties agreed to make Juan Alcaraz as Chief Executive of the merged company. The merger needs regulatory approval. It will result in a combined entity with almost half its assets in Europe, particularly in Italy and Spain. Almost one third assets will be based in Latin America and 5% in Asia.