Credit Suisse said today it has reached an agreement to sell its exchange-traded funds business, which has SFr16 billion (around $17.3 billion) of assets under management, to US investment management giant BlackRock, for an undisclosed amount.

The move was described by the Zurich-listed bank, which has embarked on measures to cut costs and boost profitability, as “an important strategic step in an industry that requires significant scale, and allows Credit Suisse to realise value in a business successfully built over many years”.

The sale is part of Credit Suisse’s strategic divestment plans that were announced in July last year.

The transaction is subject to customary closing conditions, including regulatory approvals and is expected to complete by the end of the second quarter of 2013.

The ETF business has grown rapidly in Europe as well as other regions in recent years, seeing a proliferation in the type and variety of these exchange-listed products. Typically, ETFs are designed to provide investors with a low-cost means of entering markets and is a business that usually requires large market scale. iShares, an ETF brand of BlackRock, is the world's largest provider.

“Credit Suisse will remain a large investor of ETFs through our private banking and wealth management division, and will partner closely with BlackRock to broaden the ETF product offering for our clients. We believe that BlackRock is well positioned to realise the long-term value of our ETF business,” Martin Keller, head of distribution for core investments at Credit Suisse, said in a statement.

Joe Linhares, head of iShares EMEA at BlackRock, commented: “Today’s agreement brings together the innovative culture of two premier ETF providers with a shared commitment to continually growing the ETF category. The transaction significantly extends BlackRock’s footprint in Switzerland, which is home to one of the deepest investor bases in Europe.”

In the autumn of last year, Credit Suisse increased its target for cost reductions after reporting a fall in third-quarter profit due to an accounting charge relating to its own debt.

BlackRock is the world’s largest investment management firm, with assets, as of 30 September, of $3.7 trillion. (The size of Credit Suisse’s ETF business is based on data for 30 November 2012.)