BlackRock and State Street eye Credit Suisse’s $17.2bn European ETF arm

BlackRock and State Street Global Advisors could become the first firms to bid for Credit Suisse’s $17.2bn European exchange-traded fund business, which according to press reports has been put up for sale.

Following pressures to boost its capital levels and to focus on core business lines, Credit Suisse could be ready to sell its ETF arm, for which the deadline for bids was early October, according to the UK press.

Credit Suisse has a 5% share in Europe’s ETF market, but did not manage to attract inflows in the first nine months of 2012.
BlackRock is the largest player in Europe with a 36.2% market share and $126.4bn assets.

With the acquisition of Credit Suisse’s ETF operations, State Street would increase its so far limited presence in the European market.

State Street manages the SPDR S&P500 ETF, the world’s largest exchange traded fund, which in September attracted almost a quarter of global ETF inflows, following renewed investors’ appetite for US equities.

During the month, State Street’s ETFs saw inflows of $16.2bn, followed closely by BlackRock’s iShares which posted $15bn inflows.

Those positive results contrasted with a struggle from European players in the same area. Since the beginning of the year, Commerzbank has seen outflows of $1.1bn from its ETFs, and BNP Paribas’ EasyETF operations have registered withdrawals of $735m, according to the Financial Times.

Meanwhile, both Deutsche Bank and Société Générale shifted their ETF operations from the investment banking side to reformed asset management arms this year.

In Europe, ETF providers within investment banks started to struggle over the last months, as investors changed their attitude towards derivative-based products.

Analysts have often predicted a likely consolidation of the European ETF markets, which is highly fragmented across multiple exchanges and countries.

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