Santander Takes Stake in U.K. Payments Firm -- WSJ
November 05 2019 - 03:02AM
Dow Jones News
By Julie Steinberg
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 5, 2019).
Spanish bank Banco Santander SA agreed to acquire a stake in a
U.K.-based payments platform for GBP350 million ($453 million), as
European banks hobbled by ultralow interest rates target growth
areas.
Santander will purchase just over 50% of Ebury, according to
company officials, a banking platform through which small and
medium-size companies trade internationally. The acquisition is
aimed at bolstering Santander's global payments business and help
the bank compete more broadly in trade finance, Executive Chairman
Ana Botín said in an interview with The Wall Street Journal.
Santander, one of the world's largest retail banks, is bulking
up its commercial business when low rates and political and
economic uncertainty are squeezing it and other European lenders,
driving them to look beyond their traditional strengths to bolster
their businesses. Such banks have alternated between competing with
and working alongside fintech companies trying to disrupt
established banking operations.
Santander reported last week that its third-quarter net profit
fell steeply due to a EUR1.49 billion charge to its U.K. business,
which has been hurt by Brexit and regulatory charges. Net profit
for the period fell 75% to EUR501 million, while total income rose
6% to EUR12.47 billion.
Ms. Botín said the service is geared toward companies with up to
around $50 million in revenue. Currently, Santander helps those
companies based in Spain and the U.K. with their global trade, but
relies on so-called correspondent banks in other countries to
facilitate payments. The transaction will allow clients to conduct
their foreign exchange through Santander, Ms. Botín said.
Banks are increasingly relying on transaction banking,
encompassing trade finance and cash management, because it serves
as a stable contributor to revenue, according to a recent report
from Deloitte LLP. At the 10 largest transaction banks by revenue,
transaction banking revenue in Europe, the Middle East and Africa
has been largely steady since 2015, according to research firm
Coalition.
Ebury operates in 19 countries and processed $16.7 billion in
payments in 2018. Some GBP70 million of Santander's investment will
be used to help the company expand in Latin America and Asia. The
transaction is expected to value Ebury at around GBP700 million and
close in the first quarter of next year, Ms. Botín said.
Santander is potentially looking to acquire other
merchant-acquiring startups, which process payments on behalf of
merchants, she added.
Write to Julie Steinberg at julie.steinberg@wsj.com
(END) Dow Jones Newswires
November 05, 2019 02:47 ET (07:47 GMT)
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