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Santander has struck a €7bn deal to sell stakes in its business in Poland as it cuts its exposure to retail banking in the country, with plans to devote part of the proceeds to share buybacks.
The Spanish bank’s move, announced on Monday, comes amid questions about whether its sprawling global presence, in which it has described Poland as one of its 10 “core markets”, still makes sense.
Santander said it would pocket €6.8bn by selling a 49 per cent stake in Santander Bank Polska, a retail banking business, to Vienna-based Erste Group.
The Spanish group said the funds meant it could “potentially” exceed its existing target of completing €10bn of buybacks by the end of 2026.
Although Santander will retain a 13 per cent stake in Santander Polska, the deal slashes its exposure to a country where its business has relatively few connections to its most important markets, including Spain, the UK, the US and Brazil.
The purchase gives Erste control over the third-largest bank in Poland and hands its chief executive Peter Bosek the biggest missing piece in his plans to create a top-tier retail banking group in central and eastern Europe.
Erste is also acquiring a 50 per cent stake in a Polish asset management business from Santander for €200mn, with both deals subject to regulatory approval.
Ana Botín, Santander’s executive chair, said the bank planned to devote half of the proceeds — roughly €3.2bn — to share buybacks that it has already announced.
“This transaction is another key step in our strategic focus on shareholder value creation,” Botín said. “For Santander, we crystallise value at highly attractive multiples.”
Santander said the agreed price equated to 2.2 times the tangible book value of its Poland business, a considerably higher valuation than that of the overall Santander group, whose €97bn market capitalisation is about 1.1 times book value.
Its Poland business has a return on equity of 22 per cent, versus 16 per cent for the Santander group globally.
Santander will retain a presence in Poland in consumer lending activities such as car finance.
Santander Polska is listed on the Polish stock exchange with a free float of around 38 per cent. Its shares fell 4.5 per cent in morning trading after the announcement while Erste’s stock rose 6 per cent. Santander shares edged up 0.2 per cent.
Erste already operates across half a dozen central and eastern European countries but its activities in Poland, which is by far the largest market in the region, had so far been limited to owning a broker.
Poland’s banking sector is led by two state-controlled banks, but more than two-fifths of Polish banking assets are in the hands of foreign banks that operate in Poland, including Dutch group ING and Commerzbank of Germany, which owns mBank.
Erste said the deal would “complete its growth profile” in the region and boost its customer numbers in central and eastern European countries to 23mn from 17mn. To help fund the deal, Erste will cancel a planned €700mn share buyback announced in February.
