Spain's biggest financial firms, similar to the top football teams, show their strength when times are tough. Santander configured its crisis management strategy in a way that allows it to meet its obligations and navigate challenges while maintaining a top position within the sector.
Recently, Santander and CEO Emilio Botín is finalizing plans to take its Mexican subsidiary public. If the deal goes through, it will be the biggest IPO in the history of Central America. What will Santander get out of the deal? First of all, it?s estimated that the bank could raise between 2.5 and 3.5 billion euro (some analysts predictions are even higher) through divesting between 25% and 30% of its stake in the Mexican branch. This amount of capital would more than cover the 2.1 billion euros in provisions that Santander has to come up with according to Spanish banking sector reform law.
Second of all, the deal is part of a long-term plan that originated in Brazil and aims to go public with variosu Santander branches worldwide, giving each of them greater autonomy so that branch problems don't contaminate the parent bank.
The Mexican government sees clearly that the deal will strengthen its stock market, becuase right now not one of the three strongest banking firmsin Mexico (Bancomer, Banamex and Santander)are listed on Mexico's stock market.
Ultimately, Santander will put it self in a neat and tidy position, as it has done before, and come out stronger than it was before the economic crisis. We should watch closely as the bank makes its next moves.
