Santander in £3.6bn deal

SANTANDER will splash out 16.58bn Polish zloty (£3.6bn) on a full buy-out of Poland’s third-biggest banking franchise, Bank Zachodni WBK, the bank announced yesterday.

Santander, led by chief executive Alfredo Sáenz, confirmed that a formal offer of 227 zloty (£49) per share in cash has been accepted by Allied Irish Banks, which owns 70 per cent of the business, and other shareholders.

The deal, subject to Polish regulatory approval, forms part of Santander’s ongoing strategy to diversify outside of Spain, where non-performing mortgages and capital requirements were a major drag on earnings last year.

Already, the bank derives most of its profits from outside of Spain, having embarked on an ambitious expansion programme. In the past year alone, it has announced purchases in Germany, Mexico and the UK (where it has committed £1.8bn to buy 318 RBS branches), as well as the Polish deal.

In all, the acquisitions equate to some £6.3bn in spending, an amount that has raised eyebrows in a year when banks are being forced to increase their capital ratios.

Santander says the Bank Zachodni purchase will shave 40-60 basis points off its tier one capital ratio, in addition to a 78bps drop from its other buys. But it claims that organic capital generation of 0.9 per cent in the meantime will make up most of the difference, forecasting a ratio of 8.4-8.6 per cent for this year, well above the 4.5 per cent Basel III requirement.