Banco Santander, S.A. (SAN) announced it has decided to operate under a single brand in Spain by absorbing Banesto and Banif.
Banco Santander Board approved a proposal to absorb Banesto through a merger. Banco Santander currently holds 89.74% of Banesto's share capital. The minority shareholders of Banesto, who hold 10.26% of its capital, will receive existing shares in Banco Santander at a rate of exchange that will include a premium of 24.9% over the Banesto closing quote of Dec. 14. Employees of Banesto will join Banco Santander.
The absorption of Banif, a 100%-owned unit of the Group, will reinforce Santander's specialised private banking network in Spain. Banif has 36 billion euros of assets under management and 550 employees in 52 branches.
Earlier Banco Santander Board resolved to propose to Banco Español de Crédito, S.A. a merger by absorption of Banesto by Santander, with an exchange ratio of 0.633 shares of Santander, of 0.5 europar value each, in exchange for each share of Banesto, of 0.79 euro par value each.
The integration of Santander, Banesto and Banif will allow the rationalization of the branch network, with the closure of about 700 of the three banks' 4,664 offices. The reduction in total employment will be implemented gradually. The restructuring will generate cost savings equivalent to 10%, or about 420 million euros in the third year.
Revenues are expected to increase by 100 million euros, providing total annual pretax synergies of 520 million euros from the third year. The merger will add value from the start, increasing earnings per share by 3% in the third year.
Banco Santander also announced that the Spanish National Securities Markets Commission has resolved to lift the suspension previously imposed on trading of its shares and of those of Banco Español de Crédito S.A., effective from 11:30 am on 17 December, 2012.
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