Amundi/Sabadell : A relevant agreement

Amundi and Banco Sabadell have announced an agreement whereby Amundi has purchased the Spanish bank’s AM division. They are also entering into a 10-year strategic partnership for the distribution of Amundi’s products in Banco Sabadell’s network. This deal will immediately add €21bn assets to Amundi’s AuMs and will be c.3% earnings accretive as of day one.

Amundi fills a gap with this agreement as it will enter the important Spanish market (worth c.€600bn). The acquisition will be financed exclusively through existing Amundi cash resources (hence the immediate earnings accretion of c.3% in 2020).

While much less impressive than the Pioneer acquisition in 2016 as it will add only €21bn assets to Amundi’s huge current AuMs, this agreement with Sabadell allows Amundi to enter the important Spanish market. This represents a market of about €600bn of AuM. On top of that, the Spanish market is strongly geared towards Retail (c.80% of the market). Banco Sabadell is the fifth largest Spanish bank with an 8% market share (market share in retail banking).

Amundi is paying a decent 13x P/E (2020) and 9x P/E (2020) after total synergies. Amundi did not disclose any numbers but, considering Sabadell’s cost base of €17m, these synergies will equally come from cost and revenue synergies (from the distribution of AM products in Banco Sabadell).
The operation will be earnings accretive from day one as it will be exclusively financed from Amundi’s available cash. This will however lead to a 400bp decrease in Amundi’s CET1 ratio (although the concept of the CET1 ratio is much less important for an asset manager than for a bank).

This will have a minor CET1 impact on CASA, Amundi’s main shareholder, as its CET1 ratio will decrease by 10bps.

The transaction is subject to regulatory approvals and is expected to close in Q3 2020. We however see no reason for the deal to fail on regulatory grounds. We will therefore be adjusting our numbers for Amundi going into 2020 and beyond to factor in this acquisition.