Credit Agricole's Indosuez Wealth Management to buy Italy's Banca Leonardo

PARIS (Reuters) - French bank Credit Agricole's CAGR.PA Indosuez Wealth Management arm has agreed to buy a majority stake in Italy's Banca Leonardo, in a deal which it said would add 5.9 billion euros ($6.9 billion) to its assets under management.

A Credit Agricole Indosuez Wealth Management bank logo is pictured outside a branch in Geneva, Switzerland, March 14, 2016. REUTERS/Denis Balibouse

Indosuez Wealth Management said it had reached an agreement with Banca Leonardo’s main shareholders - GBH S.p.A., Exor S.A., Eurazeo, Swilux S.A., and Torreal S.A. - to buy 67.7 percent of Banca Leonardo.

The wealth manager added it might subsequently acquire a full 100 percent stake in the Italian bank. The companies said the transaction was expected to be finalised in the first half of 2018, although they did not disclose the value of the deal.

The transaction comes as Italy - the third-largest economy in the euro zone - shows signs of emerging from an economic downturn.

Last month, data showed that morale among Italian businesses and consumers had continued to improve in October, reaching multi-year highs and pointing to a strengthening economy in the near term, while credit ratings agency Standard & Poor’s (S&P) also upgraded its rating on Italy.

Shares in Credit Agricole rose 1.7 percent in early trading as analysts welcomed the deal, which Credit Agricole said would have a marginal impact of less than 5 basis points on its core tier 1 capital ratio.

“It’s not costly in terms of capital and it will allow them to leverage their presence in Italy. Banca Leonardo is a prestigious name, and they should be able to extract synergies from the deal,” said Jean Pierre Lambert, analyst at brokerage Keefe, Bruyette & Woods, which has a ‘market perform’ rating on Credit Agricole shares.

The Banca Leonardo takeover follows a similar deal earlier this year in which Indosuez Wealth Management bought the Singapore and Hong Kong private banking businesses of French rival Credit Industriel & Commercial (CIC).

It also reinforces Credit Agricole's position in Italy after the bank's Amundi AMUN.PA fund management division acquired Pioneer Investments from Italy's Unicredit CRDI.MI.

“The wealth management sector in Italy, which is expected to grow at a rate of four percent per annum, offers great opportunities for growth and innovation,” said Indosuez Wealth Management Chief Executive Paul de Leusse.

Reporting by Sudip Kar-Gupta; Editing by Amrutha Gayathri