Santander, Spain’s largest bank, has agreed with US private equity firms Warburg Pincus and General Atlantic to sell them a 50 per cent stake in its asset management arm, confirming media reports earlier this week that a deal had been done.

“Warburg Pincus and General Atlantic will have a 50 per cent stake in a holding company that will integrate Santander Asset Management’s eleven asset management companies, primarily in Europe and Latin America,” the bank said in a statement at the end of last week.

The transaction values the asset management operation at €2.047 billion ($2.66 billion) and will generate a net capital gain for the Santander Group of €700 million, it said. Santander Asset Management currently manages €152 billion of client money, mainly in Europe and Latin America.

“The transaction will improve Santander Asset Management’s ability to compete with the leading international independent asset managers, while leveraging Banco Santander’s deep on-the-ground knowledge and experience in the markets where the bank operates,” it said.

Under the agreement, Banco Santander will distribute products managed by Santander Asset Management in the countries in which the group has a retail network. The Spanish bank said it will “benefit from the broader, enhanced range of products and services it will be able to offer its customers”.

This is not the first foray by Warbug Pincus into a Santander-owned operation. In October 2011, Warburg Pincus led a $1 billion investment in the bank's Santander Consumer USA business, a US automotive finance lending business.

General Atlantic Partners also has a history of investing in financial services companies, such as First Republic Bank.