REG - Banco Santander S.A. - Santander announces sale of 49%of Santander Polska

Banco Santander SAAnnouncement

06/05/2025 07:01

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RNS Number : 3353H  Banco Santander S.A.  05 May 2025

Santander announces the sale of 49% of Santander Polska to Erste Group Bank,
and agrees strategic cooperation across CIB and payments

 

·   Erste Group Bank AG ("Erste") to acquire a c.49% stake in Santander
Bank Polska S.A. ("Santander Polska") and 50% of Santander's Polish asset
management business TFI for a total cash consideration of €7 billion.

·   The all-cash transaction at 584 zlotys per share values the bank at 2.2
times first quarter 2025 tangible book value per share, excluding the declared
dividend of 46.37 zlotys per share, and represents a premium of 7.5% versus
Santander Polska's closing price on 2 May 2025 excluding the dividend.
Santander Polska's shares will trade ex-dividend on 12 May 2025.

·   Santander and Erste are also announcing a strategic cooperation to
leverage each firm's strengths and footprint in Corporate & Investment
Banking (CIB), and to allow Erste to gain access to Santander's global
payments platforms.

·   Following the transaction, Santander will own c.13% of Santander Polska
and intends to take full ownership of Santander Consumer Bank Polska.

·   Santander intends to distribute 50% of the capital released upon
completion to accelerate its planned share buybacks, equivalent to
approximately €3.2 billion(2), with potential to exceed the previously
announced share buyback target, subject to regulatory approval.

 

Madrid, 5 May 2025 - PRESS RELEASE

Banco Santander has agreed to sell to Erste approximately 49% of Santander
Polska's share capital for €6.8 billion and 50% of the Polish asset
management business (TFI) that Santander Polska does not own for €0.2
billion, for a total consideration of €7 billion, subject to customary
conditions including regulatory approvals 1  (#_ftn1) .

The all-cash transaction at 584 zlotys per share values the bank at 2.2 times
first quarter 2025 tangible book value per share, excluding the declared
dividend of 46.37 zlotys per share, and 11 times its 2024 earnings. It also
represents a premium of 7.5% versus Santander Polska's closing price on 2 May
2025, excluding the dividend, and 14% versus the six-month volume-weighted
average price. Santander Polska's shares will trade ex-dividend on 12 May
2025.

Following the transaction, Santander will own c.13% of Santander Polska and
plans to take full ownership of Santander Consumer Bank Polska before closing
by acquiring the 60% stake owned by Santander Polska.

Upon completion, which is expected around the end of 2025, the transactions
are expected to result in a net capital gain of approximately €2 billion for
Santander, increasing CET1 ratio by c.100 basis points, equivalent to around
€6.4 billion, and result in a pro forma CET1 ratio of around 14%.

Strategic cooperation

In addition to the acquisition, Santander and Erste are also announcing a
strategic cooperation to leverage each firm's strengths and footprint in
Corporate & Investment Banking (CIB) and to allow Erste to gain access to
Santander's payments platforms, aligning with Santander's strategy to be the
best open financial services platform globally.

·    In CIB, both Santander and Erste will leverage each other's regional
strengths to offer local solutions and market insights for their respective
corporate and institutional clients via a referral model that will facilitate
seamless client interactions and service offerings. Santander will also
connect Erste's clients with its global product platforms in the UK, Europe
and the Americas and the banks will work together as preferred partners with
the aim of building strong, mutually beneficial relationships to maximize
joint business opportunities.

·    With Payments, the banks will explore opportunities for Erste,
including with Santander Polska post-completion, to leverage Santander's
payments capabilities and infrastructure, including Santander's PagoNxt
business.

Santander's strategy is focused on generating sustainable value creation for
its customers and shareholders, deploying shared platforms across each of its
five global businesses that offer the best customer experience at the lowest
cost-to-serve, leveraging the group's network and economies of scale.

Since it announced a new phase in value creation at its investor day in 2023,
Santander has added 15 million customers, improved efficiency from 46.6% to
41.8% and generated a 62% increase in earnings per share.

Ana Botín, executive chair of Banco Santander, said,

"This transaction is another key step in our strategic focus on shareholder
value creation which is based on both accelerating our platform strategy
through ONE Transformation and growing the group's scale in geographies with
highly connected markets.

For Santander, we crystallise value at highly attractive multiples. For Erste,
they are acquiring an outstanding business with above all, a world class team,
which I am confident will continue generating value for Santander Polska's
customers, employees and stakeholders.

We will deploy the capital generated from the transaction in line with our
capital hierarchy, prioritizing profitable organic growth.

We plan to devote 50% of proceeds (c.€3.2 billion) to accelerate the
delivery of our planned extraordinary shareholder buybacks to early 2026, as
well as to potentially exceeding the previously announced total share buyback
target of up to €10 billion given the attractiveness of buybacks at current
valuations, subject to regulatory approvals(2).

Most of all, a huge thanks to Michał and to each one of our team in Poland
for their outstanding contribution to the group over all these years. It has
been an honour and a pleasure to work alongside you."

Financial impact

Upon completion of the transaction, the group will run temporarily with a CET1
ratio above its target operating range of 12-13%, with the aim of returning to
the target range over time by deploying capital in line with its capital
hierarchy, prioritizing profitable organic growth and investments across its
businesses that create a compounding effect on earnings, returns, book value
and distributions.

Santander intends to distribute 50% of the capital released from this disposal
upon completion, equivalent to approximately €3.2 billion of share buybacks.
This will accelerate the delivery of its up to €10 billion share buyback
target from 2025 and 2026 earnings and anticipated excess capital. As a
result, there is potential to exceed the previously announced share buyback
target given the attractiveness of buybacks at current valuations, subject to
regulatory approvals 2  (#_ftn2) .

The transaction is expected to be earnings per share accretive by 2027/2028
from the redeployment of capital through a combination of organic growth,
share buybacks and any bolt-on transactions that meet the group's strict
strategic and return objectives. The capital released will give Santander more
strategic flexibility to invest in other markets where the bank already
operates in Europe and the Americas to accelerate growth, increase network
revenues and maximise customer and shareholder benefits.

 

Banco Santander (SAN SM) is a leading commercial bank, founded in 1857 and
headquartered in Spain and one of the largest banks in the world by market
capitalization. The group's activities are consolidated into five global
businesses: Retail & Commercial Banking, Digital Consumer Bank, Corporate
& Investment Banking (CIB), Wealth Management & Insurance and Payments
(PagoNxt and Cards). This operating model allows the bank to better leverage
its unique combination of global scale and local leadership. Santander aims to
be the best open financial services platform providing services to
individuals, SMEs, corporates, financial institutions and governments. The
bank's purpose is to help people and businesses prosper in a simple, personal
and fair way. Santander is building a more responsible bank and has made a
number of commitments to support this objective, including raising €220
billion in green financing between 2019 and 2030. In the first quarter of
2025, Banco Santander had €1.4 trillion in total funds, 175 million
customers, 7,900 branches and 207,000 employees.

Santander Bank Polska S.A. is the third-largest bank in Poland by assets,
serving 7.5 million customers, including 1.5 million through Santander
Consumer Bank. The bank operates approximately 350 branches and employs around
11,400 people. As of end 2024, its total assets amounted to €71 billion.
Formerly known as Bank Zachodni WBK until 2018, the institution was created in
2001 through the merger of Bank Zachodni S.A. and Wielkopolski Bank Kredytowy
S.A. On April 2011, Santander became the majority shareholder, and in 2013,
the bank merged with Kredyt Bank S.A., further strengthening its position in
the Polish market.

Erste Group is the leading financial services provider in the eastern part of
the EU. Its ca. 45,000 employees serve around 16.8 million customers in 1,841
branches in 7 countries (Austria, Czechia, Slovakia, Romania, Hungary,
Croatia, and Serbia). For the first quarter of 2025, Erste Group had 358
billion euros in total assets, posted a net profit of 743 million euros, and
had a common equity tier 1 ratio (pro forma) of 16.2%.

 

 

Important information

 

Non-IFRS and alternative performance measures

 

This document contains financial information prepared according to
International Financial Reporting Standards (IFRS) and taken from our
consolidated financial statements, as well as alternative performance measures
(APMs) as defined in the Guidelines on Alternative Performance Measures issued
by the European Securities and Markets Authority (ESMA) on 5 October 2015, and
other non-IFRS measures. The APMs and non-IFRS measures were calculated with
information from Grupo Santander; however, they are neither defined or
detailed in the applicable financial reporting framework nor audited or
reviewed by our auditors. We use these APMs and non-IFRS measures when
planning, monitoring and evaluating our performance. We consider them to be
useful metrics for our management and investors to compare operating
performance between periods. APMs we use are presented unless otherwise
specified on a constant FX basis, which is computed by adjusting comparative
period reported data for the effects of foreign currency translation
differences, which distort period-on-period comparisons. Nonetheless, the APMs
and non-IFRS measures are supplemental information; their purpose is not to
substitute IFRS measures. Furthermore, companies in our industry and others
may calculate or use APMs and non-IFRS measures differently, thus making them
less useful for comparison purposes. APMs using ESG labels have not been
calculated in accordance with the Taxonomy Regulation or with the indicators
for principal adverse impact in SFDR. For further details on APMs and Non-IFRS
Measures, including their definition or a reconciliation between any
applicable management indicators and the financial data presented in the
consolidated financial statements prepared under IFRS, please see the 2024
Annual Report on Form 20-F filed with the U.S. Securities and Exchange
Commission (the SEC) on 28 February 2025
(https://www.santander.com/content/dam/santander-com/en/documentos/informacion-sobre-resultados-semestrales-y-anuales-suministrada-a-la-sec/2025/sec-2024-annual-20-f-2024-en.pdf),
as well as the section "Alternative performance measures" of Banco Santander,
S.A. (Santander) Q1 2025 Financial Report, published on 30 April 2025
(https://www.santander.com/en/shareholders-and-investors/financial-and-economic-information#quarterly-results).
Underlying measures, which are included in this document, are non-IFRS
measures.

 

The businesses included in each of our geographic segments and the accounting
principles under which their results are presented here may differ from the
businesses included and local applicable accounting principles of our public
subsidiaries in such geographies. Accordingly, the results of operations and
trends shown for our geographic segments may differ materially from those of
such subsidiaries.

 

Forward-looking statements

 

Santander hereby warns that this document contains "forward-looking
statements" as per the meaning of the U.S. Private Securities Litigation
Reform Act of 1995. Such statements can be understood through words and
expressions like "expect", "project", "anticipate", "should", "intend",
"probability", "risk", "VaR", "RoRAC", "RoRWA", "TNAV", "target", "goal",
"objective", "estimate", "future", "ambition", "aspiration", "commitment",
"commit", "focus", "pledge" and similar expressions. They include (but are not
limited to) statements on future business development and shareholder
remuneration policy.

 

While these forward-looking statements represent our judgement and future
expectations concerning our business developments and results may differ
materially from those anticipated, expected, projected or assumed in
forward-looking statements.

 

In particular, the important factors below (and others described elsewhere in
the documents mentioned above), as well as other unknown or unpredictable
factors, could affect our future development and results and could lead to
outcomes materially different from what our forward-looking statements
anticipate, expect, project or assume: (a) general economic or industry
conditions (e.g., an economic downturn; higher volatility in the capital
markets; inflation; deflation; changes in demographics, consumer spending,
investment or saving habits; and the effects of the wars in Ukraine and the
Middle East or the outbreak of public health emergencies in the global
economy) in areas where we have significant operations or investments; (b)
climate-related conditions, regulations, targets and weather events (c)
exposure to market risks (e.g., risks from interest rates, foreign exchange
rates, equity prices and new benchmark indices); (d) potential losses from
early loan repayment, collateral depreciation or counterparty risk; (e)
political instability in Spain, the UK, other European countries, Latin
America and the US; (f) legislative, regulatory or tax changes (including
regulatory capital and liquidity requirements), especially in view of the UK's
exit from the European Union and greater regulation prompted by financial
crises; (g) acquisition integration and challenges arising from deviating
management's resources and attention from other strategic opportunities and
operational matters; (f) uncertainty over the scope of actions that may be
required by us,

governments and other to achieve goals relating to climate, environmental and
social matters, as well as the evolving nature of underlying science and
industry and governmental standards and regulations; (g) our own decisions and
actions, including those affecting or changing our practices, operations,
priorities, strategies, policies or procedures; and (h) changes affecting our
access to liquidity and funding on acceptable terms, especially due to credit
spread shifts or credit rating downgrade for the entire group or core
subsidiaries.

 

Forward looking statements are based on current expectations and future
estimates about Santander's and third-parties' operations and businesses and
address matters that are uncertain to varying degrees, including, but not
limited to developing standards that may change in the future; plans,
projections, expectations, targets, objectives, strategies and goals relating
to environmental, social, safety and governance performance, including
expectations regarding future execution of Santander's and third parties'
energy and climate strategies, and the underlying assumptions and estimated
impacts on Santander's and third-parties' businesses related thereto;
Santander's and third-parties' approach, plans and expectations in relation to
carbon use and targeted reductions of emissions; changes in operations or
investments under existing or future environmental laws and regulations; and
changes in government regulations and regulatory requirements, including those
related to climate-related initiatives.

 

Forward-looking statements are therefore aspirational, should be regarded as
indicative, preliminary and for illustrative purposes only, speak only as of
the date of this document, are informed by the knowledge, information and
views available on such date and are subject to change without notice.
Santander is not required to update or revise any forward-looking statements,
regardless of new information, future events or otherwise, except as required
by applicable law. Santander does not accept any liability in connection with
forward-looking statements except where such liability cannot be limited under
overriding provisions of applicable law.

 

Not a securities offer

 

This document and the information it contains does not constitute an offer to
sell nor the solicitation of an offer to buy any securities.

 

Past performance does not indicate future outcomes

 

Statements about historical performance or growth rates must not be construed
as suggesting that future performance, share price or results (including
earnings per share) will necessarily be the same or higher than in a previous
period. Nothing in this document should be taken as a profit and loss
forecast.

 

 

 

 

 1  (#_ftnref1) Including the Polish Financial Supervision Authority (KNF).

 2  (#_ftnref2) As announced on 5 February 2025, the board intends to allocate
up to €10bn to shareholder remuneration in the form of share buybacks,
corresponding to the 2025 and 2026 results, as well as to the expected excess
capital. This share buyback target includes: (i) buybacks that are part of the
existing shareholder remuneration policy outlined below, and (ii) additional
buybacks following the publication of annual results to distribute year-end
excesses of CET1 capital. The ordinary remuneration policy for the 2025
results, which the board intends to apply, will remain the same as for the
2024 results, consisting of a total shareholder remuneration of approximately
50% of the Group's reported profit (excluding noncash and non-capital ratios
impact items), distributed in approximately equal parts between cash dividends
and share buybacks. The execution of the shareholder remuneration policy and
share buybacks to distribute the excess CET1 capital is subject to corporate
and regulatory approvals.

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