MADRID/AMSTERDAM (Reuters) - Spanish bank Santander (SAN.MC) said it will book gross capital gains of 410 million euros ($543.6 million) from its alliance with Dutch insurer Aegon (AEGN.AS) aimed at strengthening their bankassurance business in Spain.
Under the terms of the deal Santander said on Thursday it will create two new insurance companies, one for life and one for general insurance, in which Aegon will take a 51 percent stake for 220 million euros.
Santander, which will hold the remaining 49 percent stake, will sign a 25-year contract to distribute Aegon’s insurance products via its branch networks.
Spanish banks, hit by the burst of a real estate bubble five years ago that forced the country’s government to ask Europe for a 100 billion credit line for its lenders, are in the process of selling off non-core assets to strengthen their balance sheets.
The deal with Aegon excludes savings, health and auto insurance products, which will continue to be managed by Santander.
Aegon could pay more money to Santander after five years, depending on the performance of the partnership, said Aegon, which has been active in Spain for over 30 years through its network of bancassurance joint ventures with regional banks.
The Dutch company said the transaction, which would be funded from existing resources, was expected to close in the first half of 2013, subject to regulatory approval
Reporting By Jesús Aguado and Gilbert Kreijger; Editing by Paul Day and Mike Nesbit