Bankinter closes the purchase of Barclays' retail business in Portugal for 86 million euros

The bank pays a multiple of 0.4 times the book value of the business actually transferred

Bankinter takeseffective control of a business with 173,000 customers, a credit portfolio of 4,473.2 million euros, 2,507.8 million in managed assets and 2,530.8 million in deposits

Having received the obligatory authorisations from the regulators, Bankinter has today finalised the acquisition of Barclays' Personal, Private and Corporate Banking businesses in Portugal. The price paid by Spanish bank was 86 million euros, an amount based on the estimated net worth of the acquired business of 237 million euros. This amount will be adjusted up or down in the coming months once the accounts have been formalised on 31 March 2016 in accordance with the reductions agreed in the contract of sale.

For its part, Bankinter Seguros de Vida, a company controlled 50% by Bankinter and 50% by Mapfre, has formalised with Barclays the acquisition of its Portuguese life insurance and pensions business for 75 million euros, representing  a PER of 5.9.

With the formalisation of the purchase, Bankinter assumes effective control of a business that has a credit portfolio of 4,473.2 million euros; 2,507.8 million euros in managed assets off balance sheet; 2,530.8 million in deposits, a network of 84 branches, 930 employees and 173,000 customers, of which 19,400 are businesses. The incorporation of this business increases the principal magnitudes of the company's balance sheet by between 10% and 20%.

“The impact of the operation on Bankinter's balance sheet, income statement and capital and liquidity situation is very limited and perfectly assumable”, according to María Dolores Dancausa, Bankinter's CEO. The bank's top executive emphasises that “the financial terms of the operation are favourable and allow us to create value for Bankinter's shareholders from the outset of the operation”.

Commitment to the country and growth

In the six months since the purchase agreement, Bankinter has been able to confirm that the businesses acquired from Barclays in Portugal represent an excellent platform for speeding up its internationalisation and taking advantage of the enormous growth opportunities offered by the Portuguese market. It is a financial institution that is already healthy, having made difficult adjustments in the last two years. It now has a feasible size, a well-qualified staff, a business profile and customers –highly focused on Private and Business Banking– with many similarities to that of Bankinter.

In this respect, Barclays' Portuguese model fits in perfectly with Bankinter's business model, which is very focused on mid- to high-income customers and companies, based on a multi-channel distribution model with high levels of cross selling and efficiency backed by a prudent, successful management of the credit risk.

“It is an excellent platform from which to take advantage of the potential offered by Portugal, a strategic country whose economy is on the road to recovery and has a financial system that is currently in a consolidation and restructuring process” Dancausa points out. “With this operation our institution seeks to strengthen its position as a benchmark player in the new European financial framework”.

Bankinter, which had already set itself up as a subsidiary in Portugal in January, comes to the country with plans for growth and a long-term commitment. Bankinter's CEO says: “I am convinced that we can make good use of our enormous know-how in Private and Corporate Banking, our management skills and our leadership in digital banking to grow these businesses at a very favourable time in which Portugal is on the road to economic recovery”.

Once it has taken control of the banking and insurance businesses, it will begin a process that will last until the end of 2016 to integrate the personnel, equipment, operating systems, technological platforms, policies and business models of each of the banks.

On Bankinter.

Bankinter is one of the most profitable and financially solvent financial institutions in Spain. In 2015, the company had a net profit of 375.9 million euros, 36.3% more than in 2014, the best results in its history due mainly to recurrent customer business.

The bank ended the year with a solid, fully loaded CET1 capital ratio of 11.6% and a high return on capital, with a ROE of 10.9%, one of the highest among the Spanish banks. It also maintains the best quality of assets in the system, with a default rate of 4.1%, almost three times lower than the average for the sector, the result of a rigorous risk management policy.

Similarly, Bankinter is a benchmark institution due to its technological development, service quality above that of the sector and clear commitment to the innovation and use of alternative service channels in its relationship with its customers. Bankinter has been a pioneer in Spain in starting remote banking systems supplementary to the traditional branch network, via telephone, the Internet or mobile phone, which has enabled it to offer diverse relationship and product marketing possibilities from a perfectly comprehensive multi-channel strategy. In this regard, a study carried out by UBS named Bankinter as the best placed bank in Spain and the fourth in world to benefit from an expansion in mobile phone banking.