A group led by buyout firm Warburg Pincus LLC that includes Singapore’s Temasek Holdings Pte agreed to the purchase, which values the businesses at 975 million euros ($1.33 billion), the Santander, Spain-based lender said today in a filing. It will book a net capital gain of 410 million euros, provided regulatory approvals are won.
Spain’s biggest lender is selling assets to bolster capital levels that are still weaker than peers as lenders brace for the European Central Bank’s stress tests. In a similar deal last year, Santander agreed to sell half of its asset-management division to Warburg Pincus and General Atlantic LLC, valuing that unit at 2.05 billion euros and delivering a 700 million-euro gain for the bank.
“We see Santander’s capital position as still very weak,” Benjie Creelan-Sandford, an analyst at Macquarie Inc. in London, said by phone. “They need to strengthen it and today’s transaction is another effort to do so.” However, selling assets “comes at a cost, which is that they reduce revenue,” he said.
Santander shares jumped as much as 2.5 percent in Madrid trading and were up 2 percent at 7.89 euros at 4 p.m., valuing the company at 93 billion euros.
Santander has a capital ratio under fully applied Basel III criteria of about 7.9 percent, according to Macquarie’s estimates, Creelan-Sandford said. That compares with an average of about 10 percent for other Spanish banks, he said.
Led by Chairman Emilio Botin, 79, Santander has been selling off assets, including a stake in its Mexican bank in 2012 and its Colombian lender in 2011, to replenish capital. Botin has said the bank is comfortable with its capital levels as he guides Santander back toward profit levels of about 9 billion euros in 2016.
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