LONDON, July 1 (Reuters) - BNP Paribas said on

Tuesday it had completed the takeover of AXA Investment Managers

and was still discussing with supervisors the hit to its capital

ratio after regulators previously opposed it using a favourable

capital treatment.

The French bank last year embarked on the 5.1 billion euro

($6 billion) purchase of AXA's investment management

unit. It said on Tuesday the deal would create a business with

1.5 trillion euros in assets under management.

BNP expected regulators would let the deal through with

minimal effect on the bank's capital because it was buying AXA

IM through its insurance business, Cardif, to make use of a

treatment known as the "Danish Compromise" - which allows lower

capital requirements for banks that own insurance units.

But an assessment earlier this year from the European

Central Bank tempered those expectations, leading to a greater

hit to BNP's capital than the lender had initially priced in,

sources said at the time. BNP subsequently cut its forecast for

returns from the deals, and on Monday reiterated those lower

return projections.

BNP also confirmed that the hit on the group's common equity

tier 1 (CET1) ratio would be around 35 basis points - worse than

the 25 bps it had initially expected - and that discussions with

supervisory authorities were ongoing.

The bank said it would provide an update on the progress of

the deal when it publishes third-quarter results on October 28.

Sandro Pierri, CEO of BNP Paribas Asset Management, will

lead the group's asset management business while Marco Morelli,

current Executive Chair of AXA IM, will become its chair, BNP

added in its statement.

($1 = 0.8487 euros)

(Reporting by Tommy Reggiori Wilkes; Editing by Emelia

Sithole-Matarise)