Santander sells 7.8% stake in local subsidiary for US$955mn

Wednesday, December 7, 2011

Spanish bank Santander (NYSE: STD) has sold a 7.8% stake in its local subsidiary, Santander Chile (NYSE: SAN), for 486bn pesos (US$955mn).

The sale included 14.7bn shares of Santander Chile's common stock at 33 pesos apiece, the Chilean bank said in a press release.

The share price came at the higher end of analyst estimates. According to Matías Repetto, head of variable income at local brokerage Celfin, this was due to the rebalancing of the MSCI to reflect the increase in Santander's float from 25% to 33%, which prompted additional demand from the indexed passive funds that came out to buy.

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"However, it's still a good price compared to the stock's historical performance," he said, also taking into consideration the stock's strong price drop since the deal was announced November 21.

Investor demand for the sale, the second largest equity offering carried out in Chile, hit 4.5 times the original amount offered, the Santander press release reads.

Foreign institutional investors grabbed 79.4% of the offering, with local pension fund managers and other institutional investors buying 20.0%. The rest was purchased by retail investors.

The transaction is expected to close December 12. Santander now holds a 67% stake in its Chilean unit.

The move is in line with the Santander's ongoing sale of assets to prop up its capital position and reach, by June 2012, the 9% core tier 1 ratio required by the European Banking Authority.

On Wednesday, the Spanish bank announced the sale of its Colombian subsidiary (see related story), and is planning to sell a 8.2% stake in its Brazilian unit, Santander Brasil (NYSE: BSBR).

To read the press release, go to this link