BNP Paribas SA has finalized its purchase of AXA SA’s investment unit, creating one of Europe’s largest asset managers.
The newly formed business will have more than €1.5 trillion ($1.8 trillion) in assets under management, according to a release from the French bank on Tuesday. Return on invested capital is expected to exceed 14% in 2028 and 20% a year later.
The acquisition will see BNP Paribas benefit from AXA Investment Managers “market position and expertise” in lucrative assets classes such as private credit, infrastructure and real estate. The deal marks an “important moment for the entire” bank, Chief Executive Offer Jean-Laurent Bonnafé said in the release.
However, BNP Paribas has been unable to use a beneficial capital treatment that it was factoring into the transaction when first announcing it last year. That’s because the European Central Bank has taken a negative view on applying the so-called Danish Compromise when banks buy asset management units through their insurance business, a deal structure chosen by the French bank.
BNP Paribas on Tuesday confirmed previous guidance that the AXA IM acquisition will reduce its capital strength measured as CET1 ratio by about 35 basis points. “Discussions with supervisory authorities are still ongoing,” it said.
It said it will “update on the progress of the operation” at third-quarter results and it’s also planning an investor day in the first quarter next year that will be “focused on the group’s trajectory including this operation.”
Photo credit: Jason Alden/Bloomberg
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Topics Mergers & Acquisitions
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