Chile's BCI Falls as Santander Pans Florida Bank Purchase

Banco de Credito & Inversiones, Chile’s third-biggest privately owned lender, fell to the lowest in six months as Banco Santander SA analysts said its purchase of a Florida bank may not add to profit for five years.

BCI dropped 1.8 percent to 30,400 pesos as of 1:48 p.m. Santiago time, the lowest on a closing basis since November. The stock was the second-largest contributor to today’s 0.5 percent decline in the benchmark Chilean Ipsa index.

Santiago-based BCI last week agreed to pay $883 million to buy Florida’s City National Bank from Spain’s Bankia SA. (BKIA) The deal, which requires regulatory approval, is expected to close in the first quarter of 2014, BCI said in a filing last week. It will fund the acquisition entirely or partially through the sale of new shares or bonds, according to the filing.

“The price paid is not cheap,” Banco Santander analysts Boris Molina and Luis Guzman wrote today in an e-mailed note. “This deal is likely to not add value in the short term, until the economic rebound in Florida generates enough growth to make numbers work,” which could take four or five years.

The Floridian bank has a return over invested capital of about 6 percent, below BCI’s 10 percent, Santander said.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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