Wednesday, 12 November 2014

Santander Seeks French License to Build Consumer Finance

Banco Santander SA (SAN), Spain’s biggest bank, has applied for a license to expand its consumer finance business into France, stepping up a drive this year to capture customers from Sweden to Canada.
Santander is seeking to build a foothold in Europe’s second-biggest economy by tapping demand for higher-yielding consumer loans. The bank plans to expand its auto-financing accord with PSA Peugeot Citroen to offer retail loans and possibly cash loans and credit cards at a later date, said a spokesman for the bank, who asked not to be identified by name in line with the lender’s policy. Santander hired Martin Thomas, a former managing director of finance-company FGA Capital UK Ltd., to be the fledgling unit’s chief executive officer, the spokesman said.
Santander’s consumer finance arm, which operates in Germany, Sweden, Denmark, Norway, Poland and Italy as well as Spain, has almost 60 billion euros ($75 billion) of customer loans, more than 600 branches and 12 million customers in continental Europe. At a time when
low interest rates are driving down loan yields, consumer finance with its higher returns is proving an attractive business for Santander as it pushes into new markets, said Benjie Creelan-Sandford, an analyst at Macquarie Inc. in London.
“Santander is making clear that consumer finance is a key area of growth that they are targeting and there’s a lot of focus on that business globally,” Creelan-Sandford said by phone today. “Some people might prefer to see them concentrating on core markets and improving their profitability there rather than expanding into further new countries.”
After agreeing to buy the consumer-finance arm of Spanish retailer El Corte Ingles in 2013, Santander earlier this year moved to set up partnerships in 11 countries with Banque PSA Finance, the French car group’s lending arm.
Santander said in September it had agreed to buy Canadian car-financing company Carfinco Financial Group Inc. for about $270 million.
The bank announced the deal the week after the death of Chairman Emilio Botin and the appointment of his daughter Ana Botin to replace him. Santander also agreed in June to buy GE Capital’s Scandinavian consumer finance arm for about 700 million euros.
Santander consumer finance in continental Europe earned 794 million euros in 2013, an amount equivalent to 18 percent of group profit for that year. In July, Santander sold a 51 percent stake in its consumer-finance insurance business in France for 290 million euros to CNP Assurances SA.
Shares in Santander fell 1.3 percent to 6.70 euros as of 12:07 p.m. in Madrid, paring gains this year to 3 percent. The 45-company Bloomberg Europe Banks and Financial Services Index has fallen 3.9 percent over the same period.
Thomas couldn’t be reached at Santander’s office in Paris today when contacted by phone.
(An earlier version of this article was updated to correct the dateline.)

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