Banco Santander to sell 35-% stake in Santander Consumer USA for $1.15 bln

The euro zone's largest bank, Banco Santander, yesterday reached a deal to sell a 35-per cent stake in its US consumer finance business for $1.15 billion.

The Madrid-based bank will sell a 25-per cent stake in Santander Consumer USA to an investment vehicle controlled by three private equity firms Warburg Pincus, Kohlberg Kravis Roberts and Centerbridge Partners for $1 billion.

It will also sell a 10-per cent stake to the chief executive of Santander Consumer USA Thomas Dundon for $150 million.

Santander will remain the largest shareholder with a 65-per cent stake. The deal values Santander Consumer USA at around $4 billion.
The sale does not include Santander's US retail bank Sovereign.

Dallas-based Santander Consumer USA is a leading automotive finance company, whose core business is indirect, direct and third-party originations and servicing of auto loans.

The company, which started operations in 1997, has a serviced loan portfolio of more than $25 billion and relationships with nearly 13,000 automotive dealers in the US.

The US consumer finance business is one of Santander's most profitable units, having posted net profit of $455 million last year.

The bank said that it is booking a $1 billion capital gain on the deal, which will help strengthen its capital base.

Santander has been looking to expand in the Americas, in order to reduce its dependence on its home market, which is struggling due to three- year economic slump and a decade-long property boom collapsed.