The sale of Banif is being backed by grants worth €2.25bn from Portuguese authorities which was approved by the European Commission.
European Commission commissioner in charge of competition policy Margrethe Vestager said: "Banks cannot be artificially kept in the market using taxpayer money. Banif had already received significant state aid but could not become viable again on its own.
"The measures approved today now enable Banif’s orderly exit from the market, and for a robust bank to take over a large part of its activities to the benefit of its customers."
The Bank of Portugal has decided to divest Banco Banif’s business in order to rescue the latter as it failed to repay $1.2bn provided by the Portuguese government in 2013, The New York Times reported.
Santander Totta acquired Banif’s commercial banking business including assets and liabilities.
With the addition of Banif’s assets, Santander Totta becomes Portugal’s second privately-held bank, after BCP-Milenium, with a 14.5% market share in loans and deposits.
Banco Santander chairman Ana Botín said: "The acquisition of Banco Banif is another example of Banco Santander´s commitment to Portugal, one of the group´s main countries.
"We are fully committed to the economic development of Portugal and make available all our capacity to help people and businesses prosper in the communities where we operate."
Banco Banif currently operates a network of 150 branches and serves 400,000 customers.
Image: A branch of Banco Santander Totta in Lourinhã, Portugal. Photo: courtesy of Cancelos.
