Two French banks are merging their asset management divisions to combat the crisis gripping the financial services sector worldwide.

Crédit Agricole and Société Générale are combining their asset management operations, comprising the whole of Crédit Agricole Asset Management, and the European and Asian business of Société Générale Asset Management, as well as 20% of TCW, SGAM's asset management subsidiary in the U.S.

SGAM’s alternative investments will become part of its Lyxor special asset management business, which will remain within the SocGen group. The combined entity will be the fourth-largest asset manager in Europe and the ninth on a global basis as measured by asset under managements, which stood at a total of US$816 billion at the end of September.

Ownership of the combined business will be split between Crédit Agricole, which will own 70%, and Société Générale, which will own 30%.

Société Générale will appoint one-third of the directors to the new entity's board. The chairman will be appointed by Crédit Agricole and the vice-chairman by Société Générale. Yves Perrier, currently chief executive of CAAM, will become CEO of the new entity. The combined entity is also considering a stock exchange listing within the next five years.

“Given the rapidly evolving financial services sector landscape, banks are having to review their business models,” said Georges Pauget, CEO of Crédit Agricole.

“This major transaction will create a European leader in asset management, capable of tackling all the new challenges faced by the industry,” said Frédéric Oudéa, CEO of Société Générale.