Santander sells its Puerto Rico subsidiary for PER 9.5X

Renta4 | The bank has reached an agreement for the sale of Santander BanCorp Puerto Rico (including the banking business Santander Puerto Rico and the insurance business Santander Insurance Agency) to First Bancorp for 1 billion dollars.

This price means paying a multiple of 1.1X P/VCT and PER 9.5X (vs 7X – 8X average for comparable banks).

The sale responds to the group´s optimisation of structure and capital strategy, with the exit from a geographical areas where the bank does not enjoy sufficient scale. Puerto Rico only accounted for 0.5% of the bank´s assets in the first half of 2019.

The operation is pending the relevant regulatory authorisations and is expected to be closed in the middle of 2020. It will have a positive impact on capital of between 5-6 bps. Positive news but of limited impact. Overweight. O.P. Under Review (previously 5.12 euros/share).