(Adds background in third paragraph, comment in fourth.)
Dec. 7 (Bloomberg) -- Banco Santander SA agreed to sell a 95 percent stake in its Colombian unit to CorpBanca for about $1.16 billion, raising money to reinforce capital at the euro zone’s biggest bank by market value.
CorpBanca, Chile’s sixth-largest lender by assets, will finance the purchase with its own resources and a $450 million capital increase, according to a statement distributed by MarketWire yesterday. The Santander, Spain-based bank will make a capital gain of about 615 million euros ($827 million) that “will be fully allocated to reinforce the group’s balance sheet,” Banco Santander said in its own statement.
As European regulators tightened rules to shore up banks against the sovereign debt crisis, Santander said Oct. 27 it would bolster capital without selling stock or cutting its dividend. The Spanish lender had already announced sales of stakes in its Brazilian bank, its Latin American insurance business, and 7.8 percent of its Chilean unit as it strives to plug a 5.22 billion-euro ($7 billion) capital shortfall identified by the European Banking Authority.
“They are selling ‘revenues’ to generate capital, but given the options I think it’s a reasonable response to the capital needs,” Daragh Quinn, an analyst at Nomura International in Madrid.
Colombia accounted for 0.5 percent of group profit last year and the bank has a 2.7 percent market share in the country, according to Santander. That makes the sale “positive, as they benefit by generating additional capital with no real change in the make-up of the business,” Quinn said.
Banco Santander shares rose 1 percent, bringing their gain for December to 7.7 percent at 11:05 a.m. in Madrid. Spain’s benchmark Ibex 35 index rose 1 percent. Santander has said it will strive for a 10 percent core capital ratio under European criteria by June 2012, exceeding the 9 percent level demanded by the regulator.
Colombia, Latin America’s fifth-largest economy, probably grew 4.9 percent this year and may expand 4.5 percent in 2012, according to the International Monetary Fund. That compares with the Washington-based lender’s forecasts for Spanish growth of 0.8 percent this year and 1.1 percent in 2012.
The acquisition will make CorpBanca, based in Santiago and controlled entrepreneur Alvaro Saieh, the first Chilean financial services company to own a foreign bank. The deal is subject to regulatory approval in Chile and Colombia and is expected to close in the first half of 2012.
“With this acquisition, CorpBanca aims at supporting Chilean companies in their expansion through Latin America and participating in the growing Colombian banking industry, one of the most attractive worldwide,” it said.
Banco Santander Colombia’s lending portfolio totaled $2.57 billion as of Sept. 20, representing 2.7 percent of the banking system’s outstanding loans.
Corp Group Interhold, through which Saieh Group controls CorpBanca and other financial companies, will also buy at least a 2.85 percent stake of Banco Santander Colombia, under the agreement.
Separately, Santo Domingo Group, a Colombian holding company, will invest $100 million in CorpBanca to help the company “execute its growth strategy,” the statement said.
--Editor: Jonathan Roeder, Todd White
To contact the reporter on this story: John Quigley in Lima at firstname.lastname@example.org
To contact the editor responsible for this story: David Papadopoulos at email@example.com