BFM BUSINESS INFO. The Savings Banks are making great strides to unite with Generali

Discussions between the BPCE group and Generali are taking shape to create a 2,000 billion euro asset management giant. The two groups would share their joint venture and its governance.

The Banques Populaires et Caisses d'Epargne (BPCE) are preparing to create a new asset management giant. The BPCE group has been negotiating for three weeks with the Italian insurer Generali for an alliance of their savings and life insurance product management activities. According to several sources close to the two companies, “discussions are progressing very well” to the point that an agreement is “highly probable” adds a source, in “January” even dares a Natixis executive. Generali is aiming for an announcement for its investor day on January 30.

Their marriage focuses on their asset management and insurance businesses in order to find a capital balance where each would own 50% of their joint venture.

Proof that the discussions are very advanced, “the main governance points have been resolved”, adds a person close to the matter.

The future entity would be led by the boss of the Generali management subsidiary, Woody Bradford. The current general director of the Natixis management subsidiary, Philippe Setbon, would be number two. Having worked with Generali ten years ago, his background facilitates rapprochement. In this scheme, the presidency would go to a BPCE manager, logically its general director Nicolas Namias. When contacted, the two groups did not wish to comment on our information.

Generali does not want to imitate Axa

The bosses of BPCE and Generali are “extremely motivated”, assures the head of a major global manager. They are both ready to share control of their asset management to grow, while keeping one foot in it, summarizes a good expert on the matter. Hence their agreement on 50/50 co-control. “The boss of Generali, Philippe Donnet, wants to keep control of the management of savings products,” explains one of his close friends. Unlike Axa which sold its subsidiary to BNP Paribas.

With Natixis, “they are trying to give themselves the means to still count in the sector”, confirms a source involved in the negotiations.

Natixis is one of the largest European players with 1,300 billion euros in assets under management. An alliance with Generali, which weighs 840 billion euros, would propel it to the height of the European leader, Amundi, the subsidiary of Crédit Agricole which has 2,200 billion euros in assets. The race for size is on in Europe to resist the American giants Blackrock, Vanguard and Fidelity. Natixis, on the offensive, already discussed with Generali last year. It had also explored an alliance with Axa before the insurer sold its business to BNP Paribas last summer.

Similar models of independent stores

The two groups have a similar “multi-boutique” model with independent management companies. DNCA, Mirova and Ostrum at Natixis, and at Generali, Sycomore and the subsidiaries of manager Conning, bought by the insurer at the start of the year. Their merger would include the management of life insurance products from the Banques Populaires Caisses d'Epargne networks and historic partner CNP Assurances.

In the banking sector the idea is circulating that BPCE and Generali could ultimately aim for an IPO of their joint venture. The objective would be to copy the Amundi model in order to welcome other partners in asset management. “It’s very premature,” says a source close to the matter.

But in a booming sector, other insurers are considering not remaining on the sidelines of the consolidation of asset management. Less constrained by financial pressure, the mutualists Groupama, Covéa (Maaf, MMA, GMF) or Aéma (Macif) could one day follow this movement.