UPDATE 2-BNP Paribas takes Allfunds platform stake as fund managers cut costs

* BNP Paribas to get 22.5% stake in Allfunds

* Financial terms not disclosed

* Consolidation underway in the sector (Adds analyst comment, detail)

By Sudip Kar-Gupta and Simon Jessop

PARIS/LONDON, Oct 21 (Reuters) - French bank BNP Paribas has obtained a 22.5% stake in wealth management platform Allfunds in the latest sign of asset managers looking to trim costs in the face of rising regulatory expenses and pressure on fees from investors.

Under the deal, for which financial terms were not announced, BNP Paribas will entrust Allfunds with managing the distribution of third-party investment fund contracts for several BNP Paribas Group entities.

Similar to platforms such as Britain's Hargreaves Lansdown , Allfunds can offer economies of scale and help fund management companies manage increasingly tough data rules for those aiming to sell funds across borders.

The wealth management industry is proving increasingly attractive to mainstream banks since it uses up less capital than other areas and is set to be boosted by the rise of millennial high net worth individuals.

Deutsche Bank said in June that it planned to hire more staff for its wealth management business.

"It's clearly an area where investment banks see a lot of potential. You can see why BNP Paribas would want to bulk up in this space," said MB Capital investment manager James Ingram.

BNP Paribas Securities Services will also transfer its Banca Corrispondente local paying agency activities in Italy, as well as some Italian transfer agency services, over to Spanish-headquartered Allfunds.

"This partnership will enable us to significantly enhance our offering, giving our clients access to a successful and fast-growing fund distribution platform," BNP Paribas Securities Services CEO Patrick Colle said.

Allfunds was founded in Spain in 2000.

The company's website says it has more than 500 billion euros worth of assets under administration and that its platform offers more than 84,860 funds from over 1,550 investment houses.

In June, Allfunds agreed to buy Credit Suisse's business-to-business investment fund platform InvestLab for an undisclosed sum.

Singapore's sovereign wealth fund GIC and private equity investor Hellman & Friedman bought Allfunds in 2017. (Reporting by Sudip Kar-Gupta and Simon Jessop; Editing by Alexander Smith and Jason Neely)