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Santander denies plans to divest from Brazil; affiliate represents 30% of the group’s profits

Monday, May 28th 2012 - 19:56 UTC
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 Santander CEO Emilio Botin with President Dilma Rousseff Santander CEO Emilio Botin with President Dilma Rousseff

Spain’s leading bank Santander denied any plan to sell its Brazilian affiliate full or partly, as was published in the Sao Paulo media following discussions with Bradesco, another top listed Brazilian bank.

According to the reports Santander was in discussions to sell 30% to 40% of its business in Brazil, but the Spanish bank’s headquarters in Madrid and Santander Brazil denied point blank such a possibility. Santander Brazil represents 30% of the bank’s earnings since most of its European operations, as with the rest of the EU financial system, are in the red or need huge capitalizations.

The original reports on Santander Brazil, that trades 23% of shares in the local Bovespa, said that interested banks included Bradesco and government owned Banco do Brazil. Both banks refused to comment on rumours. Allegedly Bradesco and Santander have been holding talks for several months.

Brazilian banks are under strong pressure from the government to ease lending rates and expand credit given a slowdown in requests because allegedly of over indebted consumers and suffocating rates. The Brazilian government also wants the economy to recover through domestic demand and official infrastructure spending from a very poor performance in 2011.

Santander president Emilio Botín is expected in Brazil at the beginning of June when King Juan Carlos flies to Brasilia and Chile with a large business delegation to prop bilateral trade and investment, and prepare for the November Ibero-American summit in Cadiz. Last November Botin had a meeting with President Dilma Rousseff.

According to press reports President Rousseff instructed Finance minister Guido Mantega to suspend all discussions with the Spanish bank since she fears a further concentration of the industry at a time the government is trying to convince the banking system to lower interest rates and is pressing for more competition.

Santander first landed in Brazil in 1957 and in 1997 purchased the Banco General de Comercio becoming officially Banco Santander Brazil. Later it acquired Banco Noreste and Banco Meridional with subsidiaries Banco Bozano and Simonsen.

In 2007 Santander in a consortium with the Royal Bank of Scotland and Fortis took over the Dutch bank ABN Amro, which controlled Banco Real in Brazil the country’s fourth largest. In 2009 the Banco Real ceased to exist and was incorporated to Santander Brazil.

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