Santander and GE Money have agreed a €1 billion ($1.58
billion) asset swap that will see the Spanish group acquire
significant parts of GE Money’s European consumer finance
operation. In return, GE Money is taking control of Santander’s
Italian commercial banking unit, Interbanca, which it picked up
from ABN AMRO.
The preliminary agreement, subject to regulatory approval, means
Santander will acquire GE Money’s businesses in Germany, Finland
and Austria, and its cards and auto financing operations in the UK.
The four units have total assets of around €9 billion.
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A large part of the GE portfolio, around 70 percent of the
lending, is focused on auto finance, which makes it a good fit for
Santander’s existing product mix.
The deal will expand the Spanish group’s existing consumer finance
businesses by around 20 percent and is expected to generate
synergies of €140 million over three years, according to an
RBI source.
Santander’s booming consumer finance business contributed 24
percent of the group’s €7.8 billion net operating income in 2007,
an increase of 55 percent.
The move comes just a fortnight after CEO Alfredo Sáenz hinted the
bank was interested in minor portfolio acquisitions, particularly
in Germany, in an interview with
RBI.
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By GlobalDataHis bank already has successful consumer finance operations in
Germany, the UK and Austria but the deal means the bank gains entry
into the Finnish market. It will also acquire 136 consumer finance
branches – 100 in Germany and 36 in Austria – and will take over GE
Money’s contracts with car dealers in all of the new markets.
The deal also rounds off Santander’s interest in Antonveneta, the
Italian bank it divided up following the acquisition of ABN AMRO.
Antonveneta’s retail banking arm was sold off to Banca Monte dei
Paschi di Siena (BMPS) for €9 billion in October (see The all-new Antonveneta).
The Spanish group remains in Italy, with a small consumer
finance business as well as private banking. It also has
non-strategic financial stakes of less than 2 percent in some
Italian banks, including UniCredit and BMPS. Industry insiders
believe it might look at extending its presence in Italy through
BMPS’s consumer finance unit, Consum.it.
An analyst, who did not want to be named, said the bank is looking
to achieve a “critical mass” in the European consumer finance
market, which would allow it to generate cost savings across its
business.
“It’s a great deal for Santander. What they’re doing is getting
rid of an asset that’s completely disconnected with the rest of the
business, Interbanca, and concentrating on a business that makes
sense for them – consumer finance.”
In contrast, GE seems to be moving in a different direction. As
well as the Santander asset swap, it has also sold off Corporate
Payment Services, its commercial card and corporate purchasing
division in the US, to American Express for $1.1 billion.
The shift away from consumer finance comes after GE predicted
difficult consumer conditions in 2008, particularly in the US, and
said it would reconsider elements of its GE Money business. Trevor
Immelt, GE’s CEO, had already admitted the group was looking to
“partner or exit” in private label cards, which make up part of the
operation it is selling in the UK.
