MILAN-- UniCredit SpA Chief Executive Federico Ghizzoni said Tuesday the bank has decided to enter exclusive talks with Banco Santander SA to combine its Pioneer Investments asset-management unit with Santander Asset Management.

Mr. Ghizzoni said the combined entity resulting from the potential deal would basically "be a merger" between the two asset managers. He said he expects an agreement to be signed by the end of November.

"The two companies can be perfectly integrated with important potential synergies," said Mr. Ghizzoni. "Few can say they have 21,000 branches."

The plan, which was reported earlier Tuesday by The Wall Street Journal, would see the creation of one of Europe's top 15 assets managers, with 350 billion euros ($449.7 billion) in assets under management. Both asset managers can count on a large so-called captive client base, which means clients buying the asset managers' products in the two banks' branches.

UniCredit and Banco Santander would own one-third each of the combined entity. Private-equity funds Warburg Pincus and General Atlantic together would also own one-third of the new company.

In the future, Mr. Ghizzoni said the two private-equity funds would likely sell their stake via an initial public offering of their shares.

Like some asset sales that UniCredit has completed this year, the deal with Banco Santander would allow it to boost its capital base in view of the results of a financial health check European authorities are carrying out on the eurozone largest lenders. "We expect an impact on capital of 20-25 basis points," Mr. Ghizzoni said.

Mr. Ghizzoni declined to give details on the financial terms of the offer received by Banco Santander, but a person familiar with the matter said that the Spanish bank's offer valued Pioneer at between EUR2.7 billion and EUR3 billion. It would also include a cash payment by Banco Santander and the two private-equity funds to UniCredit, the person added.

Other bidders for Pioneer were private-equity funds CVC Capital Partners partnering with Singaporean sovereign-wealth fund GIC and Advent International.

Those funds made binding offers expiring Wednesday to buy a 50% stake in Pioneer, valuing the asset manager in the same range as Banco Santander's bid.

Mr. Ghizzoni said Banco Santander's offer was higher in terms of price.

Write to Giovanni Legorano at giovanni.legorano@wsj.com

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