Santander paid 2.092 million to control its Mexican subsidiary

Banco Santander has reached an agreement with Bank of America to buy its stake from 24.9% in Santander Mexico for U.S. $ 2500 million (about EUR 2.092 million), according to the agency today reported to the CNMV. Santander Mexico is the third largest financial group in the country with a market share of 14.8% in deposits and 13.0% in loans.

After the operation, which is expected to realize within 90 days and is awaiting the necessary approvals from regulatory agencies, the bank president Emilio Botin raise its stake in its Mexican subsidiary to 99.9%. The Spanish bank has an estimated positive impact of 1.3% in earnings per share from the first year and the return on capital employed rose to 15% from the third. As for the solvency, provides an impact on the main indicator of this aspect, the core capital of at least 31 basis points. The bank closed with a coefficient of 8.8% of core capital in the first quarter, which would remain at around 8.5% with this operation, a level the agency considers it very comfortable.

Santander sold the participation of 24.9% at Bank of America in 2003 by $ 1,600 million (approximately EUR 1,340 million at current exchange rates), so that all of its Mexican subsidiary was valued then at U.S. $ 6,400 million ( 5357.2 million).

The institution stands now, seven years later, the transaction with Bank of America involves assessing Santander Mexico at 10,000 million (8370.5 million), 56% more, equivalent to pay about 10 times the benefit estimated by analysts for this year, which will be around 1,000 million dollars, according to forecasts.

Santander president Emilio Botin, has stressed that this acquisition reaffirms the commitment of your institution in Mexico, "a country with very favorable prospects for growth," while allowing further geographical diversification of the Group.

Botin has used the fact that Bank of America is rethinking what business considers strategic. The U.S. organization, during the financial crisis took over Merrill Lynch and then received multi-million dollar aid for the Treasury, agreed last month to sell its stake in Brazil's Itau.