MADRID—Banco Santander SA said Friday that it has reached a deal to sell 35% of its U.S. consumer-finance unit for $1.15 billion, in an unexpected move to boost solvency at a time of uncertainty in the industry.
Santander, the euro zone’s largest bank by assets, said that the deal will be conducted through a capital increase in the unit. Around $1 billion will be raised from an investment vehicle—controlled by U.S. firms Warburg Pincus, Kohlberg Kravis Roberts and Centerbridge Partners—that will take control of 25% of Santander Consumer USA. Dundon DFS, which will also take part in the capital increase, will acquire a 10% stake, while Banco Santander will then have a 65% stake in the unit.
The deal is evidence that Santander Chairman Emilio Botin, long seen as master deal-maker in the industry, is willing to give up valuable assets to ensure the bank will have enough capital to weather turmoil in European markets. With access to funding markets severely curtailed among doubts on the solvency of the Continent’s banks, European Union leaders have been proposing measures that would force so-called systemic banks like Santander to improve their capital ratios.
Santander Consumer USA, based in Dallas, has 2,800 employees and over two million customers nationwide. It has expanded aggressively in the market of loans for car buyers as Santander has targeted growth in the U.S. as a primary goal. Last year, it posted a $455 million profit.
In recent years, Santander—which also has large units in Mexico and Brazil—has sought to expand in the Americas to reduce its dependency on its Spanish home market, where the entire banking industry is struggling in the third year of a deep property bust.
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