Santander and UniCredit have reached a preliminary agreement to merge their asset management businesses.

Santander and UniCredit are to merge their asset management arms to create a global firm with €400 billion ($435 billion) in assets under management.

Under the preliminary agreement, Santander Asset Management, valued at €2.60 billion, and UniCredit's Pioneer Investments, valued at €2.75 billion, will combine their businesses to form Pioneer Investments. 

Together, the two asset managers generated net inflows of over €25 billion last year.

The deal will see the creation of a holding company called Pioneer Investments, which will be 50 per cent owned by UniCredit and 50 per cent owned by US buyout firms Warburg Pincus and General Atlantic. 

The holding company will own 100 per cent of Pioneer's US business and two thirds of the combination of Pioneer and SAM's non-US operations. Santander will own the remaining third.

“The partnership between the two firms will provide for substantially enhanced economies of scale, a key advantage in the asset management industry, while also expanding the business's diversification with respect to investment strategies, distribution channels and region,” said UniCredit in a statement.

Juan Alcaraz, the current chief executive of SAM, will become the global CEO of Pioneer Investments, while Giordano Lombardo, the current CEO and group chief investment officer of Pioneer Investments, will be the global CIO.

The merger is expected to boost UniCredit's capital position by around 25 basis points, UniCredit added.