Banco Santander Acquires U.S. Car-Loan Portfolio for $4 Billion From HSBC

Banco Santander SA, Spain’s biggest lender, said it bought a portfolio of U.S. car loans from HSBC Holdings Plc for $4 billion.

The loans, which have a face value of $4.3 billion, will be managed by Santander’s U.S. consumer finance unit, the Madrid- based bank said in a statement. The deal will cost Santander $342 million because most of the portfolio is already financed.

The bank has bought businesses in Mexico, the U.S. and Germany to take advantage of its international presence as credit demand falters and funding costs rise in Spain following the worst recession in 60 years. Chairman Emilio Botin told shareholders in June that Santander’s Brazilian earnings would outstrip those at home for the first time this year.

Santander won’t need to raise capital to finance acquisitions, Chief Executive Officer Alfredo Saenz said at a news conference in Madrid last month.

HSBC said in an e-mailed statement late yesterday that it sold its remaining U.S. consumer finance auto-loan “run-off” portfolio to Santander.

The London-based company last year shut its U.S. consumer finance division to new customers after bad loans made the unit unprofitable since the first half of 2007. HSBC set aside more than $61 billion of provisions in North America following its acquisition of subprime lender Household International in 2003.

HSBC said Aug. 2 that first-half net income doubled, in part because the North American unit returned to profit for the first time in three years.

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net

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