Santander, Europe’s largest bank and one of the few to of come out of the global financial crisis in a relatively healthy state, have announced an Initial Public Offering (IPO) believed to be in the region of $7.2 billion dollars for the Brazilian arm of their operation; Banco Santander Brasil. Already its largest division in Latin America, this move is seen by analysts as a firm indication of the possible growth opportunities the bank believes exist in Brazil.
With a presence in Sao Paulo going back over 25 years, Banco Santander Brasil is currently Brazil’s 3rd largest bank, yet globally it is one of Santander’s most important headquarters accounting for 20% total profit for the group. This IPO on the BM&F Bovespa will be the largest offering made in the stock exchanges history, and globally the second largest of 2009. 525 million units will be sold at a range of 22 reais to 25 reais, an offering equivalent to 16.2% of Banco Santander Brasil’s current value.
Currently, the bank operate on all segments of the financial markets, with 3,600 branches across Brazil serving over 9 million customers. A further 400 branches are expected to open should the offering be successful with $1.5 billion due to be invested into expansion. The chairman of the group, Emilio Botin outlined his plans to make Santander become Brazil’s biggest non-government lender.
With far-reaching implications for private lending, it is seen as welcome and timely news for real estate investors within Brazil. Currently the mortgage market in Brazil accounts for approximately 3% of GDP, a figure which has seen the market remain stable over the duration of the global banking crisis. However, the economy has now pulled itself out of the recession and confidence is surging back to investors. The mortgage market in Brazil is still in its infancy, but with such a large offering made by Santander, it may only be a matter of time until we see some maturity.
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