Banco Santander has agreed to offload Santander Bancorp, its retail and commercial banking franchise in Puerto Rico, to FirstBank Puerto Rico for around $1.1bn.
Santander Bancorp is a bank holding company that owns Banco Santander Puerto Rico, which is claimed to be the fourth-largest banking franchise on the Island.
The bank, which is said to have a deposit market share of about 8%, has 27 branches in the region. It has a workforce of 1,000 employees and total assets of $6.2bn.
FirstBank Puerto Rico, which is owned by First BanCorp, is headquartered in San Juan. It is a state-chartered commercial bank that operates in Puerto Rico, the US and British Virgin Islands, and Florida.
Its subsidiaries include two small loan companies – the First Federal Finance and First Express.
Combined assets of FirstBank Puerto Rico and Banco Santander Puerto Rico
The combined business of FirstBank Puerto Rico and Banco Santander Puerto Rico is expected to provide the second largest branch network to customers in Puerto Rico. The enlarged entity will hold combined total assets of more than $17bn.
After the closing of the deal, FirstBank Puerto Rico will hold nearly $17.6bn in assets, $14.2bn of deposits, and a $12bn loan portfolio.
First BanCorp president and CEO Aurelio Alemán said: “While continuing to grow and invest in our franchise, we have been preparing for a strategic transaction of this magnitude. The Banco Santander Puerto Rico team expands our talent bench in retail, commercial and business banking.
“First BanCorp will become a stronger competitor in Puerto Rico with the scale and breadth to better serve retail and commercial customers, and increase our financial investments in innovation and talent development.”
Completion of the deal is subject to the meeting of customary closing conditions such as receipt of all the regulatory approvals and is expected to occur in the middle of 2020.
Santander Holdings USA CEO Scott Powell said: “FirstBank Puerto Rico shares our values and our commitment to customers, and the local communities.
“Once completed, the transaction will provide the combined FirstBank Puerto Rico and Santander Bancorp Puerto Rico the ability to offer a broad array of retail and business banking products and services, with the scale to compete through an enhanced branch network to the benefit of both banks’ current and future customers.”
Santander said that it will continue to operate in Puerto Rico through Santander Consumer USA, and also a loan portfolio which has a net valuation of $220m.
