Banco Santander buying GE Nordic Units

Written by Joseph Nordqvist

Published: 07:42, June 23, 2014

Why is Banco Santander buying GE Nordic Units? The Eurozone’s largest bank by market value says it has expanded in Europe and Latin America over the last ten years, and is now seeking out pockets of growth in new markets to offset weaker domestic business after five years of severe recession.

According to Banco Santander, Santander Consumer Finance, S.A. has reached a deal worth about €700 million ($952 million) with GE Money Nordic Holding AB to purchase GE Capital’s business in Scandinavia (Sweden, Denmark and Norway).

GE Capital is the financial services arm of the American multinational General Electric. GE Capital employs more than 60,000 people in 55+ countries. It has assets of $551 billion.

GE, based in Fairfield, Connecticut, said it wanted to reduce its exposure to the banking sector after suffering during the 2008 financial crisis. The company wants to increase its earnings mix from 55% from industrial manufacturing businesses in 2013 to 70%.

Impact on Santander’s core capital

Banco Santander will assume GE Money Bank’s intragroup funding. The transaction, which is subject to regulatory approval and is expected to be completed in the second half of this year, will “have an impact of 8 basis points in Grupo Santander’s core capital.”

Banco Santander’s Chairman, Emilio Botín, said:

“The acquisition of GE Capital’s business in the Scandinavian countries is an important step in Santander Consumer’s growth strategy. It’ll increase its geographical diversification and strengthen its position as the leading consumer finance provider in Europe”.

Banco Santander says the acquisition will complement its current presence in Scandinavia and will help Santander Consumer Finance become a major provider of consumer finance in the three countries.

A good deal, says Santander

GE Money Bank, with a loan portfolio of €2.35 billion ($3.19 billion), has attractive positions in consumer finance lines, such as credit cards and direct loans, while Santander Consumer Finance is a regional major player in auto finance, with outstanding loans totaling €8.9 billion (S12.09 billion).

GE Money Bank’s loans are distributed in the region as follows:

  • Sweden: 55%,
  • Norway: 26%,
  • Denmark: 19%.

The Spanish multinational giant added that the deal will enable its consumer finance division to grow its geographical diversification while at the same time expanding its exposure to AAA-rated nations.

After the two businesses are integrated, Santander Consumer Finance Nordic will represents about 17% of Santander Consumer Finance’s loan portfolio. It will have 1.2 million customers in the region.

About Grupo Santander

The Santander Group, which was founded in 1857, is headquartered in Santander, Spain. It has more than 180,000 employees and is active in Europe, North and South America, Africa, and Asia. Its shares are listed on the stock exchanges of Madrid, New York, London, Milan, Lisbon, Mexico City, Buenos Aires, and São Paulo.

Banco Santander buying GE Nordic Units

Santander says the deal should go through in the second half of 2014.

The American auto-finance unit of Grupo Santander, Santander Consumer USA Holding Inc., was floated in the US stock market in January. In October, 2013, the group said it would buy 51% of the consumer finance division of El Corte Inglés, Spain’s largest department store chain. It also expects to reach a deal in 2015 with PSA Peugeot Citroen, the French automaker.

The difference between the Spanish bank’s earnings from lending and deposit costs – its net interest income – increased in Q1 2014 to €6.99 billion compared to €6.93 billion in Q4 2013. Loans, driven by consumer loans, rose by 1.4%. For the first time since the 2008 financial crisis, the company reported a decline in non-performing loans. Its Tier 1 capital ratio, at 10.6%, is higher than the European Central Bank’s minimum of 8%.

Joseph Nordqvist Avatar

Other News

Better financial protection can coexist with more credit-card borrowing

Oct 24, 2026

Managers misjudged incentive contracts in mobile-money experiment

Oct 24, 2026

Colorado River study challenges assumptions about groundwater reserves

Oct 24, 2026

Mortgage fee cuts often fail to reach homebuyers in full, study finds

Oct 24, 2026

Company size can hide where supply-chain risks sit

Oct 24, 2026

Employee training depends on how a company organizes work

Oct 24, 2026

AI improved patent drafts, but lasting skill gains depended on experience

Oct 23, 2026

Global risk appetite can put company investment on hold

Oct 23, 2026

France’s shorter working week raised productivity without adding jobs at firms

Oct 23, 2026

Venture capital increasingly backs the business of winning customers

Oct 23, 2026

Travel choices and toll revenue shape the gains from congestion pricing

Oct 23, 2026

The cost of losing a job can shape who joins a young company

Oct 23, 2026

Pension payouts can turn patient investors into regular stock sellers

Oct 23, 2026

Going public can open the door to more borrowing, study finds

Oct 23, 2026

Corporate climate targets often change before their deadlines

Oct 22, 2026

Ad auction averages can hide how prices are set, research shows

Oct 22, 2026

California nursing homes cluster just below a staffing-rule cutoff

Oct 22, 2026

Chipmaking expertise crosses borders through suppliers, engineers and investment

Oct 22, 2026

Employer pay differences reach beyond wages into household spending

Oct 22, 2026

Late-payment problems rise among UK firms that offer customer credit

Oct 22, 2026