Say Ole! With This Spanish Play

Seeking to buy into an aggressive and innovative bank whose stock has been performing superbly? No, it isn't Citibank or BankAmerica. It's Banco Santander, one of Spain's major commercial banks, whose stock has raced from 37 per American depositary receipts in late December to 46 3/8 on June 1. One ADR is equal to one share.

Money manager Richard King, a managing partner at Warburg, Pincus Counsellors, is bullish on this Spanish bank, which has taken a 16% stake in First Fidelity Bankcorp and recently launched a takeover bid for Portugal's Banco de Comercio e Industria. Santander is one of the fastest-growing bank stocks in Spain. The stock "has a lot more upside power ahead," says King. Santander has dictated the "pace and direction of the Spanish banking industry," adds King, who runs the $220 million Warburg Pincus International Equity Fund.

Santander has led the way in introducing new products, such as the "SuperCuenta" interest-paying checking account and "Fondos de Inversiones" mutual funds. Santander also has aggressively expanded into an array of services, including investment banking, securities trading, and fund-management, which have boosted earnings. The bank has expanded overseas, too, forging ventures with Royal Bank of Scotland in Belgium, Germany, and Portugal. Santander owns a 9.9% stake in Royal Bank.

The bank's foreign subsidiaries accounted for 9% of consolidated assets in 1988 and grew to 20% at the end of 1992, notes King, adding that Santander's expansion has resulted in one of the "most rapid balance-sheet expansions of all the Spanish banks in years."

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