Renta 4 | UniversalPay, EVO Payments’ Spanish affiliate and former partner of Popular in paying services by credit card, is claiming 1 billion euros from Santander in compensation, after both parties failed to reach an agreement.
UniversalPay lodged the claim (which was admitted to proceedings before the summer) against Santander for a breach of the terms in its contract with Popular referring to the exclusivity of the paying services by credit card business.
Valuation: The news is negative, although in the short-term we do not think it will have an impact on the share price. These processes usually take a long time. For the time being, the bank has not released any details regarding a possible provision for this issue. If we assume the worst possible scenario, Santander has to face this contingency, and in a hypothetical case it opts to make a provision for 1 billion euros against 2022 (although we need to pay attention to the periods handled by the legal process). In this event, estimated 2022 net profit would be 7.446 billion euros (-8.6% vs current estimate). And the impact on the stock price would be -10% to 3,57 euros/share (potential of over 30%). OVERWEIGHT. TP 3,99 euros/share.