Banco Santander reached this week an agreement to sell its units in Colombia to CorpBanca of Chile for $1.225 billion, or about €910 million. This transaction will generate capital gains of €615 million for Grupo Santander, which will be used to strengthen the balance sheet in advance of new EU banking regulation Basel III being put in place.
The businesses affected by the transaction (Banco Santander Colombia and other Group subsidiaries in the country) registered profit of $54 million in 2010, accounting for 0.5% of the groups overall profit.
In search of oxygen for Santander’s core capital ratio, chairman Emilio Botín explained why it makes sense to unload the Spanish bank’s extension in Colombia; Mr Botín said
“Our market share in retail and commercial banking in Colombia is far from the 10% we aim for in the countries in which we have a presence.”
Banco Santander Colombia’s market share is a mere 2.7% in lending and deposits, with about €2.1 billion and €3.2 billion, respectively. It has a staff of about 1,400 and a network of 78 branches.
The transaction is expected to close during the first half of 2012 and is subject to obtaining regulatory approvals and the carrying out of a public offer to minority shareholders, who hold 2.15% of the Colombian banks capital.