UniCredit SpA, Italy’s biggest bank, said it ended talks with Banco Santander SA and private equity funds to combine the two lenders’ asset management units.

UniCredit will explore options including an initial public offering for its Pioneer asset management business as part of its strategic overhaul planned for later this year, the company said in a stock-exchange statement on Wednesday.

"The parties held detailed discussions to identify viable solutions to meet all regulatory requirements to complete the transaction, but in the absence of any workable solution within a reasonable time horizon, the parties have concluded that ending the talks was the most appropriate course of action," UniCredit said.

The bank is considering tapping shareholders for as much as 5 billion euros ($5.5 billion) and selling its entire stake in Poland’s Bank Pekao SA to raise capital, according to people with knowledge of the matter. Chief Executive Officer Jean Pierre Mustier, a 55-year-old Frenchman who took over as CEO earlier this month, is drafting a new business plan that he’ll present in the fourth quarter to lower costs, boost capital buffers and bolster profitability hurt by a pile of non-performing loans and record-low interest rates.

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