Spain-based lender Banco Santander has signed an agreement with HSBC to acquire an 8% equity stake in Bank of Shanghai (BoS), as part of its strategy to boost its presence in China.
Santander has also reached a cooperation agreement with BoS to jointly develop activities in wholesale banking in China.
The cost of the investment, including the purchase of HSBC’s stake and the cooperation agreement, is estimated to cost the Spanish lender nearly €470m.
The transaction is expected to be completed in the first half of 2014, pending receipt of approval from the China Banking Regulatory Commission.
As per the terms of the cooperation agreement, Santander will offer BoS a permanent team of professionals, who will contribute Santander’s knowledge and experience in risk management and commercial and retail banking.
With total assets of €98bn at the end of 2012, BoS operates as a commercial and retail bank, serving 8 million personal banking customers and almost 200,000 corporate customers through 294 branches in the country.
Santander, which already has a consumer finance venture in China as well as a car financing business, said that the acquisition will strengthen its position in the country.
In March this year, Fortune Auto Finance, a joint venture (JV) between Santander and the Chinese car manufacturer Anhui Jianghuai Automobile (JAC), officially launched operations.
Santander is also developing investment banking activities in China, mainly based on financing the substantial trade flows between the Asian giant and Latin America.
Photo courtesy of Eduardo P.