Banco Santander buys 2pc of Italian bank Monte dei Paschi

7 March 2008

MADRID – Banco Santander, Spain’s leading bank, has acquired a stake of just under 2 percent in Banca Monte dei Paschi di Siena, the Italian lender said yesterday.

At a Monte dei Paschi extraordinary shareholders’ meeting on Thursday, the bank’s general manager, Giuseppe Mussari, insisted the purchase of the stake by Santander is not linked to a deal which saw the Spanish bank agree in November of last year to sell Italian lender Banca Antonveneta for EUR 9 billion. Santander acquired Antonveneta as part of a joint takeover last year of Dutch lender ABN Amro with Royal Bank of Scotland and Dutch-Belgian financial group Fortis.

A 2-percent stake in Monte dei Paschi at current market prices is worth EUR 171.6 million.

The Monte dei Paschi EGM approved a EUR 5-billion capital increase in the form of a rights issue to help finance the Antonveneta deal. It also plans to sell as much as EUR 1 billion in stock to a JP Morgan Chase unit.

Santander made a quick EUR 2.4 billion on the Antonveneta deal. At the time of the sale Santander said while Antonveneta constituted an interesting entry point to the Italian commercial banking sector, the purchase did not secure it sufficient mass to adequately develop its business in Italy.