Spain's Santander talks to Venezuela on bank sale
By Sarah Morris
MADRID (Reuters) - Banco Santander (SAN.MC), Europe's second-largest lender, is in talks to sell the bank it owns in Venezuela to the South American country's government, a day after President Hugo Chavez said he wanted to nationalise it.
Spain's Banco Santander said on Friday it had previously talked to a group of Venezuelan private investors about selling Banco de Venezuela but had not reached an agreement.
Asdrubal Oliveros of Caracas-based analysts Ecoanalitica values Banco de Venezuela at $1.6 billion to $1.8 billion.
Nationalisations are popular with Venezuelans used to a strong state financed by wealth from oil exports, but usually alarm foreign investors in the region.
Venezuela's benchmark global bond due 2027 VENGLB27=RR fell 1.750 points on Thursday to bid 89.875, driving the yield up to 10.443 percent.
"It's looking like a negative development. I don't see why the banking sector needs to be under the purview of the public sector," said Alberto Ramos, a senior economist with Goldman Sachs.
In a statement to the Spanish securities regulator, Santander said: "Banco Santander has thereafter become aware of the interest of the government of Venezuela in Banco de Venezuela, and is now in discussions on that."
Chavez told a live television broadcast on Thursday he had decided to buy the Spanish bank after Santander asked for permission to sell it to a local group.
"I said no, I'll buy it from you -- what's it worth? We'll pay it," said Chavez, without specifying a price. "We are going to nationalise Banco de Venezuela."
On Friday, Spain's Deputy Prime Minister Maria Teresa Fernandez de la Vega told reporters in Madrid that the government would not intervene because it was not a case of a forced nationalisation.
The Spanish government had spoken with Chavez's government and Santander Chairman Emilio Botin over the issue, she said.
"Botin told me they are going to reach an agreement," she told journalists after a news conference.
Chavez threatened to kick Spanish banks out of Venezuela last year in a diplomatic spat sparked by a dispute with Spain's king. But last week he patched up relations with Spain in a high-profile visit when he met the king and the prime minister.
According to Venezuela's Official Gazette on Friday, Chavez had used special presidential powers to decree a reform to banking laws, but no further details were available.
Market speculation in June that Santander planned to sell its Venezuelan unit caused Banco de Venezuela shares to jump 25 percent on the Caracas stock exchange, but the deal was apparently blocked by the government. No price was disclosed.
The government already runs several smaller banks and will likely use its purchase to offer loans to small businesses.
Chavez usually fairly compensates his takeover targets.
Santander's shares closed 2.4 percent lower at 12.05 euros on Friday, in line with Spain's blue-chip index .IBEX.
The Spanish bank owns 98.4 percent of Banco de Venezuela, which has deposits worth 7.9 billion euros ($12.3 billion). Banco de Venezuela made net profit of 179 million euros in 2007, up 23 percent on the year.
Banco de Venezuela is the South American nation's third-largest bank in terms of deposits and the fourth measured by its credit portfolio.
While banks have benefited from Venezuela's economic growth of more than 8 percent last year on record oil prices, inflation of 23 percent in 2007 complicated lending.
(Additional reporting by Brian Ellsworth and Andrew Hay; Editing by Erica Billingham)
