Santander to raise billions in Brazil IPO

SANTANDER is to raise up to $7.3bn (&pound;4.5bn) via an initial public offering of shares in its Brazilian subsidiary, the bank said yesterday.<br /><br />The Spanish bank &ndash; the world&rsquo;s second largest &ndash; said it would sell shares constituting 16.2 per cent of the division, which will trade on the Brazilian stock exchange and the New York Stock Exchange.<br /><br />Santander said it hopes to raise between 11.55bn Brazilian reals (&pound;3.9bn) and 13.13bn reals with the offering of 525m units consisting of 55 common shares and 50 preferred shares in Banco Santander (Brasil).<br /><br />The offer, which is scheduled to being trading in New York on 6 October, is intended to help Santander fund a drive to beef up its Brazilian operations.<br /><br />&ldquo;We intend to use the net proceeds from the global offering to expand our business in Brazil by growing our physical presence and increasing our capital base,&rdquo; the bank said in a statement to the market.<br /><br />&ldquo;We also intend to enhance our funding structure and, along with our traditional funding sources, increase our current credit transactions,&rdquo; it added.<br /><br />Of the funds raised in the offering, 70 per cent will be devoted to increasing infrastructure in the form of new branches and ATMs, as well as to fund an increase in credit transactions in commercial and global wholesale banking.<br /><br />Around 20 per cent of the cash will be used to improve the unit&rsquo;s funding structure, while the remaining 10 per cent will go towards bolstering the bank&rsquo;s capital base to improve its capital adequacy ratio in Brazil.<br /><br />Investors will be able to reserve shares from 28 September until 5 October, the bank said yesterday.<br /><br /><strong>SANTANDER HOW A SPANISH GIANT THRIVED IN THE BANKING CRISIS</strong><br />Santander&rsquo;s initial public offering of its Brazilian unit will see Credit Suisse and Santander Investors acting as global co-ordinators on the offering. The two will also act at joint bookrunners, alongside UBS and Bank of America Merrill Lynch.<br /><br />The offering could be the latest in a long line of successes for Santander, as European rivals have floundered in the depths of the banking crisis.<br /><br />The Spanish banking group, chaired by Emilio Botin, has emerged as a major player on the UK high street after adding Alliance &amp; Leicester and the savings book of Bradford &amp; Bingley to its UK stable.<br /><br />Together with Abbey, the business it bought for &pound;8m in 2004, the bank is to bring the units together under the name Santander UK, led by chief executive Ant&oacute;nio Horta-Os&oacute;rio.<br /><br />The bank owes its success in part to chief executive Alfredo Saenz, who made his name saving failing banks.<br /><br />His stewardship saw Santander adopt a more cautious approach to its business model during the boom years, even as UK banks such as RBS and HBOS were lending recklessly, or indulging in risky short-term trades in investment banking.<br /><br />The group has consistently delivered profits as rivals have gone cap in hand to governments for hand-outs.<br /><br />For the first half of 2009, the bank booked attributable profit of &euro;4.5bn, a healthy return even in kinder economic climes.<br /><br />The IPO of its Brazilian unit looks set to be yet another fillip for the group.