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Santander signs a cooperation agreement with Bank of Shanghai and buys an 8% stake

Santander firma un acuerdo de colaboración con Bank of Shanghai y adquiere el 8% de su capital

  • The Group and Bank of Shanghai will develop joint activities in wholesale banking in China. 
  • The transaction will have an impact of approximately 1 basis point on the Group’s capital.

Madrid, December 10, 2013 - Banco Santander has reached a cooperation agreement  with Bank of Shanghai to buy an 8% equity stake in Bank of Shanghai (BoS). The transaction, which is subject to approval from the China Banking Regulatory Commission, will make Santander the second-largest shareholder in BoS and its strategic international partner. The transaction is expected to be completed in the first half of 2014. The cost of the investment, including the purchase of HSBC Ltd.’s stake and the cooperation agreement with Bank of Shanghai, is estimated at approximately EUR 470 million. The transaction will have an impact of approximately 1 basis point on the Santander Group’s capital.
Under the terms of the agreement, Santander will provide BoS with a permanent team of professionals, who will contribute Santander’s knowledge and experience in risk management and commercial and retail banking. The two will develop joint wholesale banking activities.

BoS is the second-biggest urban commercial and retail bank in the country, with total assets of EUR 98 billion and a net profit of EUR 902 million at the end of 2012. The bank has a total of 294 branches, 231 based in Shanghai, where its headquarters and 70% of its assets are located, and is present in ten other Chinese cities. It is also the only urban, Chinese bank with a branch presence in the Shanghai Free Trade Zone. It has 8 million personal banking customers and almost 200,000 corporate customers, most of which are small and medium-sized companies.

The stake in BoS, along with the strategic agreement with the Chinese bank, will strengthen  Santander’s position in the country. In May 2013, the Group received clearance from the local regulator to buy 20% of Bank of Beijing’s consumer finance subsidiary (Bank of Beijing Consumer Finance Company), making Santander the second-biggest shareholder. In March this year, Fortune Auto Finance, a joint venture between Santander and the Chinese car manufacturer Anhui Jianghuai Automobile (JAC), officially started operations. Fortune is a multi-brand car finance company that operates throughout the country and is 50% controlled by Santander.

Santander is also developing investment banking activities in China, mainly based on financing the substantial trade flows between the Asian giant and Latin America. The bank currently has branches in Shanghai and Hong Kong, and a representative office in Beijing (which will soon be turned into a branch). In 2012 Santander became the first Spanish or  Latin American bank to win authorization to operate in the local currency, the renminbi, which allows it to carry out transactions for corporate customers established in China.

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Santander signs a cooperation agreement with Bank of Shanghai and buys an 8% stake

President of Bank of Shanghai, Fan Yifei and President of Banco Santander, Emilio Botin, during his visit to Ciudad Grupo Santander in Boadilla del Monte.

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