By Jesús Aguado and Alexandra Schwarz-Goerlich
MADRID/VIENNA (Reuters) -Erste Group Bank has bought a 49% stake in Santander’s Polish bank for around 6.8 billion euros ($7.7 billion), turning Austria’s largest lender into one of the most important banks in Poland and freeing up billions for Santander.
Santander, the euro zone’s biggest lender, and Erste also clinched a deal to give the Austrian bank 50% of the Spanish lender’s Polish asset management business for 200 million euros.
Both sales give Santander money to spend expanding in the Americas and help the Austrian group fill a gap in its presence across Europe. Erste already operates in seven countries across Central and Eastern Europe, from Hungary to Romania.
The deal is one of the biggest cross-border deals in Europe in recent years and underscores the appeal of Poland, one of Europe’s largest countries and fastest-growing economies.
Poland has thrived on the back of homegrown consumption, fuelled by double-digit wage growth.
Santander Bank Polska is the country’s third-largest bank by assets and also one of the most profitable in Poland, where interest rates have been higher than in the euro zone.
Peter Bosek, Erste’s chief executive, said the deal would allow the group to build up its presence in the region.
Erste avoided taking a larger stake to sidestep a mandatory takeover offer for the remaining shares. Shares in Erste jumped 7.8%, while those in Santander were up 0.6%.
“It’s hard to call the purchase of Santander a bargain, but that doesn’t mean they are overpaying,” said Millennium Bank analyst Marcin Materna.
The cash deal valued Santander Bank Polska at 2.2 times first-quarter 2025 tangible book value per share – putting an overall price tag on the bank of roughly 13.9 billion euros.
It represented a premium of 7.5% to Santander Bank Polska’s closing price on May 2, excluding the dividend, Santander said.
Erste said it would fund the deal from its own resources, supported by the cancellation of a 700-million-euro share buyback programme and temporarily reduced dividend.
Bosek said that Erste Group was not worried about the Swiss franc-denominated loan portfolio as part of the deal and said it was taking on only a limited share of the risk.
Many Polish homeowners took out mortgages in the 2000s in Swiss francs due to the much lower interest rates compared to loans in Polish zloty. But repayments soared when the franc surged.
On Monday, Santander’s Chair Ana Botin said the bank had provided guarantees on these mortgages with a cap of 200 million euros.
The overall transaction was expected to increase Erste Group’s earnings per share by over 20%, Erste said, with Santander expecting to book a net capital gain of around 2 billion euros by the end of 2025.
Following the deal, Santander will own 13% of Santander Polska and take ownership of Santander Consumer Bank Polska.
Both banks also announced a strategic cooperation in corporate and investment banking that would also allow Erste to gain access to Santander’s global payments platforms.
Santander said it would use part of the proceeds from the deal to expand organically in Europe and the Americas. Speaking to analysts, Botin said that the bank was focused on growth in the U.S. and that its UK unit was not for sale, adding that further bolt-on M&A would need to be complementary to Santander’s strategy.
Botin said Santander intended to distribute 50% of the capital, around 3.2 billion euros, released from the sale to shareholder buybacks to early 2026 and could potentially exceed the previously announced share buyback target of up to 10 billion.
($1 = 0.8835 euros)
(Reporting by Jesús Aguado and Alexandra Schwarz-Goerlich, Anna Koper, Tristan Veyet and Mateusz Rabiega. Editing by Emelia Sithole-Matarise, John O’Donnell, Mark Potter and Joe Bavier)
