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BlackRock Buying Credit Suisse's ETF Unit

The European exchange-traded fund (ETF) industry is seeing further consolidation with this new acquisition

Alanna Petroff 11 January, 2013 | 11:31AM

BlackRock (BLK) confirmed this week that it is buying Credit Suisse’s (CSGNexchange-traded fund (ETF) division, which has more than £10 billion in assets under management. BlackRock’s ETF division, iShares, is the largest ETF provider in Europe. 

"[The] agreement builds on [BlackRock's] commitment to Switzerland, expanding on BlackRock’s presence in the Swiss market and representing the firm’s second acquisition in the country in the last twelve months," stated BlackRock in a press release. This acquisition "will expand iShares’ local product range in Switzerland, enhancing its ability to service the diverse local investor base."

Market observers say the acquisition will help iShares grow and solidify its leading position in the overall European ETF market.

“The purchase could have been motivated by the simple fact that iShares wants to become even bigger and prevent competitors such as SPDR and Vanguard from growing their footprint in Europe,” said Morningstar ETF analyst Gordon Rose.

The European ETF market is a relatively young, growing market compared to the US, and this marks further consolidation in a fragmented industry.

“We’ve been talking about the need for consolidation in the European ETF market for a few years now,” said Morningstar ETF analyst Hortense Bioy. “This acquisition of Credit Suisse’s ETF business by BlackRock, which comes as no surprise to us, signals the beginning of this process.”

The Credit Suisse ETF unit manages 58 funds which are domiciled in Switzerland, Ireland and Luxembourg. The sale is expected to close in the second quarter of 2013.

There is currently significant product overlap between the two providers, notes Rose.

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Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
BlackRock Inc330.53 USD0.51
Credit Suisse Group AG25.85 CHF-0.12
About Author Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.