(13 July 2010 – Europe) Spain’s biggest bank Santander has signed an agreement to acquire the Swedish bank SEB’s German retail banking business for €555 million (A$800 million).Under the agreement Santander will take possession of all of SEB’s 173 retail branches in Germany, with around 1 million customers and 2,000 employees on the books.
SEB said that with Santander taking over the bank’s retail operations in Germany the bank would be able to focus on its merchant banking and wealth management divisions.
SEB’s CEO, Annika Flakengren, said the sale of the bank’s German banking business will free up capital that will be reinvested in SEB’s core strategic growth areas.
The bank also said that the price of 555 million euros was at a premium to allocated equity of 420 million euros. It added transaction costs were estimated at 375 million euros.
SEB previously had announced the bank’s intentions to sell off the German retail business because of unsatisfactory profitability.
Kimmo Rama, Evli Bank analyst said that the sale was a positive deal for SEB with the bank being more focused on corporate banking in Germany, and the retail branch has been loss making for some time.
In the low margin German retail sector, economy of scale is necessary and thus Santander is a good fit, Mr Rama told Dow Jones Newswires.
SEB is Sweden’s third-biggest bank in terms of market capitalisation and employs about 21,000 people worldwide.