(Bloomberg) -- Banco Santander SA is ending its involvement in a custody and asset servicing unit it set up with Credit Agricole SA five years ago.
Santander has signed an agreement with Credit Agricole to sell to it the 30.5% it owns in the unit called Caceis, turning the French lender into its sole owner, according to a statement on Thursday. The deal is part of Santander’s strategy to shift capital to where it achieves the best returns, it said in the statement.
The move ends a joint venture set up by Spain’s largest bank and Credit Agricole in 2019 as the two companies sought to pool resources. The business of offering custody services tends to have small margins and requires sophisticated infrastructure, making size important for profitability.
Caceis had about €5 trillion ($5.2 trillion) in assets under custody at the end of last year, according to its website, similar to the amount at its competitor Societe Generale Securities Services. BNP Paribas SA’s custody unit had $15 trillion in assets under custody at the end of the third quarter.
Santander previously took out a hedge on its Caceis stake to offload associated risk, Bloomberg reported in September. The lender has been one of Europe’s most active sellers of bank risks and assets.
The sale of Santander’s Caceis stake is scheduled to happen next year once regulatory approvals have been obtained and it’s expected to add about 10 basis points to the lender’s CET1 ratio, according to the statement on Thursday. The joint business of Santander and Caceis in Latin America isn’t part of the deal.
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