Santander announced that it has agreed to sell its retail and commercial banking franchise in Puerto Rico, Santander Bancorp, the holding company that includes Banco Santander Puerto Rico, to FirstBank Puerto Rico, for a total consideration of approximately $1.1B. Banco Santander Puerto Rico is the fourth largest banking franchise on the Island with a deposit market share of c.8%. It has 27 branches and 1,000 employees, with total assets of $6.2B. The combined business will offer customers the second largest branch network in Puerto Rico, with combined total assets in excess of $17B. The consideration represents a 1.1x price to total book value, and the transaction is expected to close in the middle of 2020, subject to regulatory approvals. In the meantime Santander will continue to serve its customers as normal. Santander will maintain a presence on the Island, including through Santander Consumer USA, and a retained loan portfolio with a net valuation of $220M. The purchase price, as of June 30, 2019, would comprise: $425M a 17.5% premium on consolidated core tangible common equity of $362M, plus $638M of consolidated excess capital paid at par, and is subject to adjustment based on the consolidated balance sheet at closing.
