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| Date |
22/11/2000 |
| Companies
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BANCO DO ESTADO DE SAO PAULO - BANCO SANTANDER CENTRAL HISPANO - |
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BSCH gives some payment details over Banespa deal |
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Banco Santander Central Hispano tried to calm the markets yesterday. The markets believe BSCH vastly overpaid for the purchase of Banco do Estado de Sao Paulo. (see earlier report for deal details). Amongst statements the bank made during conference calls and press statements were:
* BIS overall Ratio would drop but remain over 11%. BIS Tier one predicted to fall from 9.2% to 8%
* The deal represented 2.4 times Banespa book value and 10.7 times earnings and therefore was not out of line. (NB BSCH bought 30% of the equity and 60% of the voting rights - however they say the remaining shares are worth (just) US$850m)
*Cost savings for 2003 calculated at US$500m, ONE THIRD of current costs. Elsewhere says will invest $150m in updating technology
* Likely to be funded by a share issue. May be by placement with strategic partners (in all or part), dilution effect said to be minimal. Bank also says may be all or part in preference shares or convertibles. Bank says its ready to pay for the sale on Monday, `liquidity is not a problem'. Also says strategic partners have already guaranteed $700m 'in basic capital' for project
* Losses in previous years by Banespa have accrued large tax credits so benefiting profit prospects for the future.
Standard & Poor placed BSCH on Credit Watch with Negative Outlook. This follows similar action by Fitch yesterday.
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