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

“Santander reaches agreement with Warburg Pincus and General Atlantic to grow its global asset management business,” the bank said in a statement today.

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 Banco Santander's Santander Consumer USA, a US automotive finance lending business.

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

“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,” it said.

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

“The transaction will improve SAM’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 SAM 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.”