Credit Suisse to sell traded funds activity to BlackRock

10th January 2013, Comments 0 comments

Swiss banking giant Credit Suisse said on Thursday it would sell its stock exchange-traded investment fund business to US investment firm BlackRock as part of a divestment plan announced last July.

BlackRock is a huge investment group and a leader in exchange-traded instruments.

Credit Suisse said that at the end of November its so-called ETF business was managing assets worth 16 billion Swiss francs ($17.3 billion, 13.2 billion euros), and that the sale was expected to be completed by mid-2013.

The bank did not disclose the terms of the deal which, it said, still needed approval from regulatory authorities.

"This is an important strategic step in an industry that requires significant scale," the Swiss bank said in a statement.

Thursday's announcement was not unexpected, yet Credit Suisse saw its share price rise 0.84 percent to 25.17 Swiss francs in midday trading on a Swiss stock market marginally down.

"The ETF business is generally a low margin business which needs scale to make it attractive," Vontobel analyst Terese Nielsen said in a note, pointing out that BlackRock is one of the world's largest ETF providers.

The sector meanwhile currently represents only about four percent of Credit Suisse's managed funds, she said.

ETFs, which enable investors to invest in a bundle of assets in the same category, are traded on the stock exchange in the same way as individual stocks. They represent assets such as stocks, commodities and bonds.

© 2013 AFP

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