Santander in asset swap deal with General Electric
Spanish bank to strengthen consumer finance business28 March 2008
MADRID - Banco Santander said Thursday it had entered an initial agreement with two financial units of General Electric to swap assets valued at some EUR 1 billion in a move which will strengthen the leading Spanish bank's position in the consumer finance market in Europe.
Under the terms of the preliminary accord, Santander is to acquire GE Money's businesses in Germany, Finland and Austria, and well as its card and auto businesses in the United Kingdom. In turn, GE Commercial Finance will acquire Santander's Italian commercial bank, Interbanca.
Santander acquired Interbanca last year as part of its joint bid for Dutch lender ABN Amro with the Royal Bank of Scotland and Dutch-Belgium financial group Fortis.
The GE Money units, which have total assets of EUR 9 billion, will be absorbed by Santander Consumer Finance and Santander Cards. GE Commercial Finance will integrate Interbanca.
"This transaction will enable Banco Santander to continue consolidating Santander Consumer Finance as a European leader in consumer finance," said Magda Salarich, a senior executive vice president of the bank, and head of its consumer finance division.
The president and chief executive of GE Money, William H. Cary, said the operation "allows us to optimise our own portfolio for continued growth and investment, while meeting GE's strategic objective of redeploying assets within finance services."
The asset swap is subject to the completion of a final agreement and regulatory approval.
Interbanca was a unit of Italian lender Banca Antonveneta, which Santander also acquired as part of the ABN deal. The Spanish bank subsequently sold Antonveneta to Italy's Monte dei Paschi for EUR 9 billion.
Santander paid EUR 6.6 billion for Antonveneta and Interbanca, which means it booked a capital gain from offloading the two businesses of EUR 3.4 billion.
The Spanish bank also acquired Brazilian lender Banco Real as part of the ABN operation. Santander's share price closed up 1.67 percent yesterday.
[Copyright El Pais/ A. Sim 2008]