Santander sale of local unit won't affect credit rating - Fitch

Friday, December 9, 2011

The sale of its Colombian unit by Spain's Santander (NYSE: STD) to Chilean bank CorpBanca (NYSE: BCA) will not decrease the international diversification that helps support Santander's credit rating, Fitch said in a report.

Fitch downgraded Santander's credit rating from AA to AA- with a negative outlook in October, reflecting the material challenges for many European banks. That same month, Santander announced plans to increase capital by some 6.47bn euros (US$8.65bn) to meet stricter capital rules by European regulators.

The Colombian unit's sale will provide a capital boost of 615mn euros, but will not affect Santander's geographic diversification, given that the bank's operations in the country have just a 2.7% market share, Fitch noted.

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In October, Santander announced plans to increase capital by some 6.47bn Euros to meet a 9% target for its core tier 1 ratio, after a preliminary review of European bank capital by the European Banking Authority.

Santander also recently sold a 7.8% stake in its Chilean unit for US$955mn and is planning to sell an 8.2% stake in its Brazilian unit.