Santander and AEGON have announced they will create a new life insurance company.

AEGON will own 51% of the new business and Santander 49%.

The bank will distribute their insurance products via its joint branch network in Spain.

Santander and AEGON will share responsibility for managing the insurance products.

Santander will sign a 25-year contract to distribute insurance products.

The partnership combines AEGON’s experience and leadership in managing insurance and developing products with Santander’s extensive distribution capacity in the Spanish market.

Javier Marín, head of Santander’s global private banking, asset management and insurance division said: "This agreement will allow us to offer customers a wider and more innovative range of insurance products, co-managed by one of the world’s leading Insurers. It will accelerate our growth in the insurance business, thanks to the combination of the partners’ strengths."

The transaction will generate a pre-tax capital gain of €410m ($548m) for Santander.

The transaction requires authorisation from Spain’s Office for Insurance and Pensions and from the European Competition Authorities.

The deal is expected to close in the first half of 2013.