* Santander says listing of U.S. car unit is a possibility
* Too early to talk of timing for the listing
* Analysts say right decision to list from capital viewpoint
* Group profitability could be weakened
By Jesús Aguado
MADRID, Nov 22 Santander may list its
U.S. car financing division to squeeze yet more cash out of
overseas businesses to shore up its defences against weakness in
The Spanish bank said on Thursday it was still too early to
discuss timing for a share sale of the business - Santander
Consumer USA - something already proposed in a deal signed last
year with its other shareholders.
"The possibility of an IPO (initial public offering) of
Santander Consumer USA (SCUSA) is included in the shareholders'
agreement signed in October 2011 with our partners," a
spokeswoman for Santander in Madrid said.
The bank is under pressure from financial regulators to
raise capital to cushion against potential troubles at home,
even though it has weathered Spain's property market crash
better than its rivals.
Santander has benefited from overseas expansion, which means
it makes less than a fifth of its profit in Spain.
"Over all, selling off divisions is a right decision in
order to avoid other costly ways of raising capital," said Maria
del Paz Ojeda, banking analyst at the brokerage of Grupo Banco
Sabadell. "But spinning off profitable business will contribute
to making the group less profitable."
Spain became the focal point of the euro zone debt crisis
earlier this year as it became clear its banks would need
financial support to rid balance sheets of around 185 billion
euros ($237.15 billion) of toxic real estate assets.
Santander's provisions for real estate exposure rose to 5
billion euros by the end of September, around 90 percent of the
requirements required under Spanish law.
The bank has already listed its Mexican, Brazilian and
Chilean arms and its Argentine and British businesses are
expected to follow.
Santander's chairman Emilio Botin said during the $4 billion
share sale of its Mexican business in September that the bank's
goal was to list all its large units within five years.
COUNTING ON US RECOVERY
The bank is counting on expectations of a recovery of the
U.S. car market to make the sale of the car financing business
attractive to potential investors.
"Santander is trying to take advantage of a slight recovery
in the U.S. consumer market to give its business a greater value
and visibility," said Maria Lopez, analyst at Espirito Santo.
Santander Consumer USA could be worth as much as $6 billion,
according to the Wall Street Journal, which reported that the
bank was planning a sale in the first half of 2013.
"Taking into account a $6 billion valuation for the
Santander Consumer business in the USA this would imply a three
times net asset value which seems a little bit high," Lopez
The Spanish bank said on Thursday the valuation would depend
on the share price at the time of the sale.
The bank controls 65 percent of the Fort Worth, Texas-based
SCUSA through a holding company. Private equity firms KKR &
Co., Warburg Pincus, and Centerbridge Partners
have a combined 25 percent stake. The remaining 10 percent
belongs to Dundon DFS.
When Santander incorporated new partners in the subsidiary
in October 2011 it valued the company at $4 billion.
Santander Consumer USA had assets of more than $24 billion
at end-June and a second quarter profit of $459 million.
Santander shares were up 0.9 percent at 5.763 euros at 1500
GMT, while blue-chip index Ibex-35 was up one percent.
Santander's shares have lagged other European banks as Spain
drags its feet on requesting a sovereign bailout after it signed
up for a credit line from the European Union worth up to 100
billion euros ($128.19 billion) to rescue its banks.