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News : Irish Economy Last Updated: Sep 13, 2010 - 5:11:32 AM

Spanish banking giant Banco Santander to buy Allied Irish Banks’ 70% stake in Bank Zachodni WBK - - Poland’s 5th biggest bank
By Finfacts Team
Sep 11, 2010 - 1:59:15 AM

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Spanish banking giant  Banco Santander reached an agreement Friday to buy Allied Irish Banks Plc’s 70% stake in Poland’s Bank Zachodni WBK for €2.94bn. Santander also agreed to acquire AIB’s 50% share of BZ WBK Asset Management for €150m. Bank Zachodni WBK is Poland’s 5th biggest bank.

The sale is a bitter one for Ireland's once biggest bank, humbled by the devastating property crash. AIB needs to raise €7.4bn in capital by the year end and it has been in the Polish market for 15 years. Poland is Eastern Europe's most important emerging economy.

The sales brings cash of €2.5bn to AIB, leaving €4.9bn to be found from the sale of  a 22.5% stake in US bank MT, its UK business and First Trust bank in Northern Ireland.

AIB closed with a value on the Irish Stock Exchange on Friday of €659m compared with €3.6bn for Bank of Ireland and CRH at €9bn.

Ireland's stake in AIB may end up as high as 75%.

Banco Santander has emerged from a housing crash in its home base as one of Europe's biggest banks.

Last December, the European Commission approved Santander Consumer Finance’s acquisition of AIG’s retail banking business in Poland.

Banco Santander announced in August its agreement to buy 318 U.K. branches from Royal Bank of Scotland Group Plc,  putting it in the No. 4 position in terms of branch-network size in the U.K., a position previously held by HSBC.

Santander, which entered the UK market when it acquired Abbey National in 2004, during the financial crisis acquired Alliance & Leicester and Bradford & Bingley at firesale prices. It now has just over 1,300 UK branch offices.

The banking giant is also a big player in the Latin American market.

Banco Santander is a retail and commercial bank, based in Spain, with a presence in 10 main markets. At the end of 2009, Santander was the largest bank in the Eurozone by market capitalization and fourth in the world by profit. Founded in 1857 in Santander, Santander had €1.245trn in managed funds at the end of 2009. Santander’s 170,000 employees serve its 92 million customers through 13,660 branches, more than any other international bank. It is the largest financial group in Spain and Latin America, with leading positions in the United Kingdom and Portugal. Santander has a broad presence in Europe through its Santander Consumer Finance arm and in the US northeast through Sovereign Bancorp. In 2009, Santander registered €8.94bn in net attributable profit.

Banco Santander has been run by the same family since it was founded in 1857 and at its annual meeting of shareholders in the Spanish port of Santander last month, Emilio Botín, the chairman who is 75, said earnings from Brazil will outstrip profit from the bank’s home market for the first time this year. Botín is married to Paloma O'Shea, Marquess of O'Shea and Santander is in the region of Spain where most Irish can trace their origins to. 

Finfacts article, Sept 2009: Irish Central Bank declared its impotence before launch of the euro; Why Spain's biggest banks survived huge housing boom

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