Banco Santander SA (STD) is on an acquisition spree. The company is intending to acquire a stake in Bank Zachodni WBK, a Polish Bank. In fact, Santander is planning to buy three overseas businesses from Allied Irish Banks (AIB), according to a report in the Financial Times.
As part of the restructuring efforts following the bailout, Allied Irish Bank needs to sell its 70% stake in Bank Zachodni WBK; a minority stake in M&T Bank (MTB), a regional US bank; and a number of branches in the UK.
The Zachodni stake acquisition would help Santander to possess a bank in an emerging market. Nevertheless, PKO Bank Polski S.A. — Poland’s largest bank — and BNP Paribas SA (BNPQY) are said to be giving Santander a run for its money in acquiring the Polish stake. The stake is said to be worth about 11 billion zlotys ($3.5 billion). The competition is said to be less for the acquisition of the UK assets of Allied Irish.
These acquisition deals are in line with strategic reengineering efforts at Santander. Its home market is still mired in a deep recession. Diversification of its footprint is an obvious alternative for the company.
Earlier in August, Santander struck a deal to acquire 318 branches and associated assets and liabilities from Royal Bank of Scotland Group plc. (RBS). The deal is expected to be completed by the end of next year. The selling price is at a premium of GBP350 million to net assets at closing. This business’ implied equity is GBP1.3 billion.
Also in July, Santander made a deal for the acquisition of the Swedish company Skandinaviska Enskilda Banken AB’s retail banking network in Germany for €555 million ($701 million). This deal is part of Santander’s efforts to become a full-service retail bank in Germany. To boost its market share in Mexico, Santander also bought back its 24.9% stake in its Mexican arm, Grupo Financiero Santander, from Bank of America Corp. (BAC) for $2.5 billion in June.
The financial crisis was a blessing in disguise for Santander, which has been busy in buying at a discount over the past two years. The company made acquisitions of several businesses in the Continent and America. In the U.K., Santander acquired Alliance & Leicester and parts of Bradford & Bingley during this period. In Germany, the company added the consumer finance business of Royal Bank of Scotland and General Electric Co. (GE).
Santander currently carries a Zacks #3 Rank (Hold), implying no clear directional pressure on the stock over the next one to three months.
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