State Street and USB Group are in talks about the possible merger of their asset management businesses.

According to Reuters, talks between the two parties started earlier in the year but fell through in June which one source said was because they could not agree on pricing and succession.

Goldman Sachs has been hired by State Street to review options for its asset management business which believes it needs to boost its size in order to remain competitive.

The merger would make a big splash in the European ETF industry. With €35.7bn ETF assets under management in Europe, a merger with UBS, which has €59.3bn would create Europe’s third-largest ETF issuer just behind DWS.

Last April, it was reported UBS was in talks with Deutsche Bank “for a couple of months” over a possible merger of their two asset management arms, however, nothing came of it.

The M&A space in Europe’s ETF industry is hotting up with Société Générale putting its asset management arm up for sale.

According to reports, Amundi, BNP Paribas, JP Morgan, State Street and Deutsche Bank are all interested in purchasing the French asset manager.