* Santander to buy 8 pct Bank of Shanghai stake from HSBC
* Deal, including cooperation agreement, worth 470 mln eur
* Bucking the trend as big rivals sell out of China
* Santander says eyeing China trade flows with Latam
By Sarah White and Matt Scuffham
MADRID/LONDON, Dec 10 Santander,
Spain's largest bank, is to buy HSBC's 8 percent stake
in Bank of Shanghai, just as many international rivals are
beginning to sell out of China.
Santander, which already has a consumer finance venture in
China as well as a car financing business, said on Tuesday the
Bank of Shanghai deal also included a cooperation agreement,
taking the value of its investment to 470 million euros ($647.3
Several major U.S. and European banks including Bank of
America and Switzerland's UBS have started
shedding their Chinese holdings for a variety of regulatory and
HSBC, meanwhile, has been selling minority holdings as part
of a restructuring since the start of 2011. It has cut 46,000
jobs and sold or closed 52 businesses, including a minority
stake in Chinese insurer Ping An.
But Santander said it would help state-controlled Bank of
Shanghai, which it said had 98 billion euros of assets and was
the second-biggest city-focused commercial and retail bank in
the country, with training in areas such as risk management.
It is also planning to develop a joint wholesale banking
business, adding to what Santander might be able to offer some
of its big corporate clients in Latin America, a key hub that
provides around 50 percent of its profits.
"Santander is also developing investment banking activities
in China, mainly based on financing the substantial trade flows
between the Asian giant and Latin America," the bank said in a
statement which listed existing ventures in China.
Asia-focused HSBC said China was still one of its priority
markets and Chief Executive Stuart Gulliver has said in recent
months that its 19 percent stake in Bank of Communications
"Our priorities ... will emphasise the growth of our own
operations in mainland China and our own partnership with Bank
of Communications," Peter Wong, chief executive
of HSBC Asia Pacific, said in a statement on Tuesday.
Gulliver had said in May that HSBC could sell its Bank of
Shanghai stake for between $500 million and $600 million.
Santander declined to comment on Tuesday on how much it had paid
for the 8 percent stake alone.
Santander also has 20 percent of Bank of Beijing's consumer
finance subsidiary and earlier this year launched a 50/50 joint
venture in car financing with Anhui Jianghuai Automobile (JAC)
Peers have been selling out of China in part because some
struggled to make quick progress with their Chinese joint
ventures, and also because they are bulking up capital ahead of
more stringent international solvency rules.
Santander's main rival in Spain, BBVA, recently
trimmed its stake in China's CITIC Bank Corp to just
under 10 percent, as having stakes in foreign banks will become
more expensive over that limit under new capital regulations.
Santander has sold assets elsewhere in recent years,
including in Latin America. But it has been in a more
acquisitive mode in recent months, even in its home market
Spain, which is slowly emerging from a five-year economic slump.
In October it spent 140 million euros on a 51 percent stake
in the country's largest consumer finance business, run by
department store chain El Corte Ingles.
Santander said it expected its deal with Bank of Shanghai to
close in the first half of 2014. It said the transaction would
impact its capital to risk-weighted assets ratio by about 0.01
Bank of Shanghai was reported earlier this year to be
planning to list its shares in Hong Kong within the next 12
months, though it was not immediately clear if the Santander
deal would influence those plans.