Santander is expected to sell Santander Consumer USA car financing division in order to raise money to cope with the loss in Spain.
Yesterday, November 22nd, Santander announced that it is too early to discuss details about the selling of Santander Consumer USA, even if this plan is part of a deal signed in 2011 with its other shareholders. As financial regulators put pressure on the bank to raise money to be able to face potential troubles in Spain, a deal may come sooner than expected.
“The possibility of an IPO (initial public offering) of Santander Consumer USA (SCUSA) is included in the shareholders’ agreement signed in October 2011 with our partners,” a spokeswoman for Santander in Madrid said.
Until now Santander managed to deal with the property market crash in Spain better than its rivals, mainly because the company has benefited from overseas expansion. Earlier this year Spain was hardly hit by the euro zone debt crisis, becoming its focal point. At the end of September Santander’s provisions for real estate exposure reached 5 billion euro, which is about 90% of the requirements made under Spanish law.
“Over all, selling off divisions is a right decision in order to avoid other costly ways of raising capital,” said Maria del Paz Ojeda, banking analyst at the brokerage of Grupo Banco Sabadell. “But spinning off profitable business will contribute to making the group less profitable.”