Santander buys SEB’s German branches
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Santander of Spain, the eurozone’s largest bank by market capitalisation, on Monday said it had agreed to buy the German retail bank business of Skandinaviska Enskilda Banken for €555m ($698m).
The agreement, which had been expected, is the latest move by Santander to expand outside its home market in Spain.
“Germany is a core market for Santander,” Emilio Botín, Santander chairman, said in a statement. “This acquisition is a significant step towards achieving our goal of being a full-service retail bank in Europe’s largest market.”
Santander Consumer Bank AG is already a leading provider of auto finance and consumer loans in Germany, with 6m customers. The deal to buy SEB’s 173 German branches, which is expected to be completed next year following regulatory approvals, will nearly double the size of Santander’s German branch network.
The SEB branches serve 1m customers, including 10,000 small and medium-sized businesses, mainly through making mortgage loans and taking deposits.
Santander said the purchase would cost it about 10 basis points in the group’s core capital ratio, which stood at 8.8 per cent of assets at the end of the first quarter.
Santander’s increased presence in Germany brings it into more direct competition with incumbents such as Deutsche Bank and Commerzbank in the fierce battle for German retail deposits. The country’s retail banking market is extremely fragmented, with most Germans using small local savings banks and co-operatives.
Deutsche has attempted to build scale by buying a stake in 2008 in Postbank, which it is expected to take over completely within the next year. Commerzbank bought Dresdner Bank in 2008, in an attempt to become the largest bank serving German retail customers.
Foreign banks have rarely been attracted to the German high-street banking market, although Italy’s UniCredit bought HypoVereinsBank in 2005, in the biggest cross-border banking deal in Europe. UniCredit had also been in the running for the SEB business to try to expand its presence.
The other large non-German rival in the market is Credit Mutuel, the French mutual, which bought Citibank’s German retail business in 2008.
SEB’s sale of its German business would signal defeat for the lender in its efforts to become a force in German retail banking 11 years after entering the market. The Swedish bank has been considering a sale since 2008, but efforts to find a buyer were abandoned during the financial crisis.
Annika Falkengren, SEB chief executive, has long made clear her dissatisfaction with the German retail operation, which has suffered from low profitability and lack of scale in a fiercely competitive market.
SEB entered the German retail market in 1999 through the acquisition of BfG Bank from Credit Lyonnais for €1.6bn. But Germany has increasingly taken a back seat, as the Swedish bank focused on expansion in the Baltic states of Latvia, Lithuania and Estonia over the following decade.
Elsewhere in Europe, Santander is also expected to win the auction for a network of UK retail branches being sold by Royal Bank of Scotland.
Aside from Europe, Mr Botín has focused on the US and Latin America in recent months. Brazil is already a big contributor to the group’s global profits. Last month, Santander paid $2.5bn to buy Bank of America’s minority stake in its Mexican operations and so take back full control of the business.
Francisco Luzón, managing director of Santander’s Americas division, has meanwhile told the Financial Times of the bank’s desire to increase its presence in Latin American countries where it has only a small share of the market, notably Peru and Colombia.
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