The Spanish bank Santander on Wednesday confirmed it has been authorized by the Chinese Banking Regulatory Commission (CBRC) to proceed with the acquisition of 20% of the Bank of Beijing Consumer Finance Company (BoBCFC). Santander will invest RMB 306 million, or about EUR 38 million, to acquire new shares of BoBCFC in a capital increase to be carried out by BoBCFC.
After the transaction, Santander Consumer Finance will be BoBCFC’s second largest shareholder, with a 20% stake, following Bank of Beijing with 35.29%. Other Chinese investors participating in the capital increase will hold the remaining stake. Under a strategic alliance agreement it signed with BobCFC, Santander will participate in the development and management of the company.
In 2009, Bank of Beijing was granted one of the four pilot consumer finance licenses in China. It was the first bank to start operations, in 2010, with the aim of serving the retail consumer market through a specialized business model, accompanying China’s economic transformation. After three years of operations, the Beijing-based company has a credit portfolio of more than RMB 2 billion, or about EUR 250 million.
Bank of Beijing is a leading regional commercial bank in China, with over RMB 1.12 trillion of assets (EUR 138 billion). It is the most efficient bank in China in terms of employee productivity and cost-to-income ratio.
Other prominent co-investors include Legend Holding, the parent company of PC vendor Lenovo, Dalian Wanda, a Chinese media and real estate conglomerate that recently acquired the American theatre chain AMC Entertainment, and other retailers that will provide their point-of-sale networks to jointly develop the business.
This transaction represents another milestone in Santander’s growth in China. In March 2013, Fortune Auto Finance, a joint venture set up by Santander and Chinese car maker Anhui Jianghuai Automobile (JAC), commenced operations. It is a multi-brand car finance company which operates across China, in which Santander owns 50% and has appointed the CEO and the Chief Risk Officer.
In addition to the two consumer finance companies, Santander is also active in the global wholesale banking businesses in China, with the aim of financing the enormous and growing trade flows between China and Latin America. Santander is now present in the region in Beijing, Shanghai, Hong Kong, Singapore, Tokyo, Seoul, and Sydney.
Since 2008, Banco Santander, through its Santander Universities Global Division, has signed cooperation agreements with some of the most prestigious universities of China: Tsinghua University, Peking University, Renmin University, Beijing Institute of Technology, Shanghai Jiao Tong University and Fudan among others. The agreements consist of Spanish language training and international mobility programs for students and researchers. Banco Santander supports Chinese universities in their internationalization and links to other countries and regions, such as Spain and Latin America.