* To buy GE Money Bank for 700 million euros
* Santander diversifying away from Spain
* GE reducing exposure to volatile banking
(Adds analyst, details, background, shares)
MADRID, June 23 Spain's Santander is
buying GE Money Bank, GE Capital's consumer finance
business in Sweden, Norway and Denmark, for 700 million euros
($950 million) in its latest move to diversify away from its
struggling domestic market.
The deal is expected to close in the second half of this
year and will reduce the core capital ratio of the euro zone's
largest bank by 8 basis points, Santander said on Monday.
Santander has expanded in Latin America and Europe over the
last decade and has said it is looking for pockets of growth in
new markets to make up for weaker business at home after a
five-year economic downturn.
"This improves their geographic distribution, which before
was very concentrated in Germany, and also diversifies the
business ... with a chance of entering the commercial banking
business in these countries where they have very limited
presence," said Nuria Alvarez, an analyst at broker Renta 4, of
Santander's consumer finance business.
U.S. conglomerate General Electric is seeking to reduce its
exposure to the volatile banking sector, which hurt the company
during the 2008 financial crisis.
It is aiming to increase its earnings mix to at least 70
percent from its industrial manufacturing businesses by 2016, up
from about 55 percent last year, which would reduce the profit
contribution from its GE Capital business to about 30 percent.
"The acquisition of GE Capital's business in the
Scandinavian countries is an important step in Santander
Consumer's growth strategy," chairman of the Spanish bank Emilio
Botin was cited as saying in its statement.
"It'll increase its geographical diversification and
strengthen its position as the leading consumer finance provider
Following the transaction, Santander Consumer Finance Nordic
will have over 1.2 million customers in the region and will
represent around 17 percent of the loan portfolio of the bank's
global consumer finance business, Santander said.
Santander Consumer USA Holding Inc, the auto-finance
unit of the Spanish lender, debuted on the U.S. stock market in
January, booking 740 million euros in net capital gains from the
listing of 21.6 percent of the business.
Santander last October said it would pay 140 million euros
for a 51 percent stake in Spain's largest consumer finance
business from department store chain El Corte Ingles.
The Spanish lender has also said it expects a consumer
financing deal with French carmaker PSA Peugeot Citroen
to be completed in the second half of 2015.
At 0805 GMT, Santander shares were down 0.6 percent at 7.8
euros, broadly in line with Europe's blue-chip index.
($1 = 0.7366 euros)
(Reporting by Paul Day and Jesus Aguado; Editing by Jason Neely
and Mark Potter)