Source: Forbes.
Original news wire available here.
LONDON, August 6 – Venezuelan President Hugo Chavez is reportedly ready to offer Banco Santander USD 1.2 billion for its local unit Banco de Venezuela. He announced last week his intentions to nationalize the unit but the Spanish bank must seek a better deal, analysts told Forbes.com.
Banco Santander is selling its operation there, although it provides the bank with juicy profits and it represents 2.3 percent of its global operation, as political uncertainty grows. Chavez said late Thursday that he would nationalize Spanish-owned Banco Venezuela after the government learned the owner had plans to sell it.
“There is still bargaining space for Santander. This price is very low; it is quite a profitable bank with strong growth. According to my estimates, it is worth USD 2.5 billion but Santander should try at least to sell it for USD 1.9 billion,” Pierre-Alexander Pechmeze, an analyst with Oddo Securities, told Forbes.com.
The Spanish bank said it had planned to sell its Venezuela subsidiary to a group of local investors but had not reached a deal. The Spanish government said it had no plans to intervene in a possible nationalization.
Venezuelan bonds remained unchanged in reaction to the news of the price offer. The USD denominated Global bond maturing in 2027 is steady on the day at USD 90.0 bid, with a spread to 30-year US Treasuries of 581 basis points. However, Venezuelan bonds have fallen 1.5 percent since Chavez announced his plans.
“The key to further reaction in bond prices will be the trajectory of negotiations between Chavez and Grupo Santander as there appears to be a large [difference] between these parties in the valuation of Banco Venezuela,” Enrique Alvarez, head of Latin America Financial Markets Research at IDEAGlobal, told Forbes.com.
Chavez’s intentions to nationalize Banco de Venezuela is the latest shopping item in a list that includes telecom firms, along with steel and cement plans, thanks to increasing public funds deriving from the benefits of rising oil prices. Venezuela is the fourth-largest producer of oil in the world.
Banco Santander acquired Banco de Venezuela in 1996. The bank has nearly 3 million customers and USD 11.0 billion in assets.
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