Banco Santander SA and Aegon NV agreed to create two insurance joint ventures in Spain, generating a 410 million-euro ($542 million) pretax gain for the Spanish lender.
Santander, Spain’s biggest bank, will create life-insurance and non-life units in which Aegon will take 51 percent stakes, the Spanish lender said in a filing to regulators in Madrid today. Aegon will pay 220 million euros and may make an additional payment after five years, depending on performance, the Dutch insurer said.
The pretax gain is based on the valuation of the whole company and will be used to bolster Santander’s balance sheet as Spanish lenders seek to shore up capital levels amid rising loan defaults.
Under the 25-year deal, Santander will market the insurance products through its branch network in Spain. The transaction is expected to be completed in the first half of next year, after regulatory authorization, Santander said.