Posts Tagged ‘spain’

Viva Espana … or at least Bank Santander

 

Whilst watching the demise of some of the worlds oldest & biggest financial institutions & also the dismal rights issues & re-financing by the likes of Royal Bank of Scotland & Barclays, there is a shining light in international banking at the moment. Bank Santander (NYSE – STD)

Whilst Barclays (NYSE – BCS) have gone the route of Sovereign Wealth investments, with a hefty price tag & RBS (NYSE – RBS) had an utterly dismal rights issue, which has resulted in it being  58% owned by the British government, Santander has been busy bolstering itself & its recent acquisitions.

In October, Banco Santander continued its drive into the Anglo-Saxon market by picking up US-based Sovereign this week, it is clear which side the Spanish bank thinks it is on. Santander snapped up the remaining 75% of Sovereign that it did not own for only $1.9bn (£1.1bn).

With its purchase of Alliance & Leicester, picking up Bradford & Bingley’s 200 branches and Monday’s $1.7bn cash injection into its Abbey subsidiary, Santander has used the crisis to become a major player in Britain. Only Lloyds TSB and RBS hold more deposits in the UK. It now holds more than 10% of UK deposits, where other banks have been working on back-office, Santanders strategy of conecentrating on the front end (i.e. the customer) seems to be paying off.

“The winner takes all,” Santander’s chief financial officer, José Antonio Alvarez, told a conference last week, as he explained his bank’s policy of buying while the market was in crisis.

Santander, he said, was planning to “add value by rescuing falling banks at attractive prices”. It would become part of a group of strong banks, he predicted, that would grow at the expense of the weak.

To rub salt into RBS gaping wounds, Spanish banking giant Santander announced a full take-up for its 7.2bn (£5.9bn) rights issue.

Bank Santander Chairman Emilio Botin “I am delighted with the great success of this transaction. It demonstrates once again that Santander’s ability to act quickly, strengthening its core capital to approximately 7%, which is especially important in the current economic scenario. This transaction highlights the confidence & strength of the Spanish economy & its financial system. (Full PR here : Santander )

As discussed in an earlier post, Brazil is going through a wave of banking acquisitions & consolidation, Santander cannily bought up ABN Amro’s Banco Real operation last year, adding this to its existing operations has now resulted in Santander being the number four in Brazil, commonly seen as one of the leading BRIC economies, with total assets now exceeding BRL 330 Billion.

Now there is talk of a bond issue being underwritten by the Spanish government. The initiative includes €100 billion  ($129.4 billion) of state guarantees in 2008 for new financing by credit entities operating in Spain to boost liquidity and jump start lending.

So Viva Santander !!! This boy is going long

UPDATE : since time of writing, The Irish Independant has reported that Allied Irish Bank (NYSE – AIB) could be the next takeover target for Santander.

From Santander’s standpoint, the Irish group’s UK commercial banking operations – which account for just under 20% of profit – would complement Abbey National, which Santander acquired under two years ago, but which is more heavily engaged in retail banking. Integrating the two banks would result in a bidder achieving attractive revenue and cost synergies.

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Russian Energy Bears

 

& not talking about “bears” in the market sense either.

We are all familiar with the stories of Gazprom trying to muscle into neighbours energy markets, but something a little more interesting is quietly going on at Lukoil.

For those not in the know, Lukoil is the largest private oil producer in Russia, with a similar track record of acquiring majority stakes in neighbouring countries energy assets. This strategy is now being expanded, with Lukoil now in negotiations to acquire 30% of Spanish oil giant Repsol. You can get a good idea of Lukoil acquisition efforts from this press release source : Lukoil Corporate PR

The Spanish opposition is none too happy about this, as reported in the Barcelona Reporter , Spain’s conservative opposition leader Saturday hit out at the possible sale of a stake in oil major Repsol to Russian energy group Lukoil , saying he would do “everything possible” to prevent it.

“Nobody in Europe has sold its energy supply and put it in the hands of a Russian company,” Mariano Rajoy told a political meeting.

Interestingly enough, Gazprom had tried this earlier this year, as two of Repsols main shareholders (savings bank La Caixa & construction company Sacyr Vallehermoso) are being forced to realise a cash sale to stave off problems elsewhere. The combined stake is valued at up to $6B. Gazprom was rebuffed by the Spanish Government, after the Russian Deputy Prime Minister revealed that Gazprom were interested in the stake.

 Maria Teresa Fernández de la Vega , the Spanish deputy prime minister –

the government wanted Repsol to remain a company that was “managed by Spaniards … and guarantees supplies”.

So, back to Lukoil, which is 100% privately owned, mostly by minority shareholders, but also with a 20% holding by US oil firm ConocoPhil¨lips.

This wouldn’t have anything to do with the fact that the current Spanish administration feels as though it is not being taken seriously at the top table of global politics ? PM Zapatero, has been left out in the cold by the Bush administration for quite a while now, after Spains retraction from bilateral anti-terrorism activities. Recently Zapatero was heard to complain that he had not been invited to the latest G8 + 5 Summit in Washington.

All this going on while the European Commissioner Jose Manuel Baroso commented on EU efforts to secure non Russian dominated energy supplies.

The EU wants different sources of supply We must not sleepwalk into Europe’s energy dependence crisis.

Obviously the fact that Lukoil & ConocoPhillips are already partners in a lucrative Russian JV in the Timan Pechora oil & gasfields has no bearing on the decision making at all.

 

Tail wagging the dog ?