Santander is poised to make two more bold acquisitions – in the UK and US – as the Spanish bank continues to scoop up the assets of troubled rivals.
Sharon Lorimer
Santander House
In the US, Santander has agreed a preliminary deal to buy $4.3 billion of car loans from HSBC, part of the wind-down of the UK bank’s troubled American consumer finance arm, according to people close to the transaction.
Meanwhile, the bank is set to announce the acquisition of 318 branches from the Royal Bank of Scotland, mainly in north-west England.
Santander’s acquisition of the RBS branches had originally been valued at about £2 billion ($3.1 billion), but the announcement of the deal will not put a full price on the acquisition.
Instead, it will comprise a “premium” of somewhere more than £100 million, plus an unidentified net asset value of the portfolio to be acquired, which will not be finalised until the transaction closes, in as much as 18 months’ time.
One person close to the negotiations said that the final deal value could be somewhere between £1 billion and £1.5 billion, although it could fluctuate drastically by the end of next year.
Santander last week revealed a slight year-on-year fall in first-half net profitsto €4.45 billion ($5.86 billion), as bad loan provisions and domestic weakness dragged down strong performances elsewhere.
The UK was a bright spot for Santander as underlying pre-tax profit in the region rose 10 percent.
The group is consolidating the operations it has acquired – Abbey, Alliance & Leicester and part of Bradford & Bingley.
The deal to buy the RBS branches – and the predominantly small business accounts that come with them – could be followed by other UK deals if any materialize. However, the bank is thought to have reached the limit of what it wants in the retail banking market.
In July Santander built on its position in Germany, buying 173 branches from a retrenching SEB of Sweden for €555 million.
In North America it is considering a deal to buy M&T, the Buffalo, New York-based group. However, for the time being the two banks are only talking “in a very light way”, according to one person close to the matter.
Over the next two or three years Santander is keen to build on its presence in Latin America. The bank is preparing for another acquisition drive in the continent after recently spending $2.5 billion to buy out the 25 percent minority stake of its operation in Mexico.