Italy's UniCredit and Spain's Banco Santander are scrambling to save a plan to create Europe's third-largest money manager after the UK's vote to leave the EU added to concerns about the outlook for the €5.3 billion deal.

Pioneer Investments, UniCredit's fund management arm, and Santander Asset Management have been in talks for more than 20 months to create a European fund manager with almost €400 billion in assets.

The transaction has been hit by a number of complications since negotiations began, including new management at both banks and changes to the terms of the deal last year to avoid provoking US regulators.

One person close to the talks said that the UK’s vote to leave the EU has also changed the outlook for the deal. Investment companies in London could face restrictions selling fund management products into the EU. European regulators are also scrutinising the deal.

Santander Asset Management has its headquarters in the City of London. A person following the deal said: "A lot has changed since the deal was first announced. The overall environment has evolved with a new CEO arriving at UniCredit and most recently Brexit."

UniCredit chief executive Jean-Pierre Mustier told Italian journalists after a board meeting that the lender was working with Banco Santander to find a solution to progress with the Pioneer deal.

Santander Asset Management is jointly owned by Banco Santander and private equity groups Warburg Pincus and General Atlantic, which acquired a 50 per cent stake in the unit in 2013.

Warburg Pincus and General Atlantic declined to comment. A spokesperson for Santander said: “We await a number of regulatory responses for the transaction.”

Emilio Botín, Santander executive chairman, died in September 2014 just before the initial deal was agreed. Ana Botín, who replaced her father, renegotiated its terms in April 2015 by stripping out Pioneer’s US activities.

– (Copyright The Financial Times Limited 2016)