Italy's Generali and France's BPCE said on Tuesday they had taken the first step towards creating Europe's largest asset manager by revenue as the industry bets on size to protect profit margins. The

With €1.9tn in AUM, the joint venture would allow the pair to expand globally and speed up a push into private markets.

Natixis Investment Managers is set to merge with the asset management arm of Italian insurer Generali, creating the largest European asset manager by revenue.

Under the terms of the tie-up, BPCE and Generali Investments will combine their asset management operations in a 50-50 joint venture, people familiar with the situation said. A non-binding preliminary agreement could be reached as early as next week. It would still need to be approved by the relevant unions and authorities.

Italy's top insurer Generali aims to reach a preliminary accord with Natixis Investment Managers to combine their asset management operations in order to submit the deal to its board on Jan. 20, two people close to the matter said.

The combined entity will have equal ownership, with each party holding 50% and sharing governance and control.