SEB deal with Santander will not affect real estate activities

The sale by Swedish financial group SEB of its German retail banking activities to Spain's Banco Santander for EUR 555 mln will not affect its commercial real estate activities, a spokeswoman for the Stockholm-headquartered group said on Monday. SEB's real estate activities fall under the merchant banking division which will remain a core business, she added.

SEB said on Monday it was selling its German retail banking business to free up capital for its core strategic growth areas - merchant banking and wealth management. 'Germany, the largest economy in Europe, remains an important market for us. We have been present there for nearly 35 years and going forward we will focus on merchant banking and wealth management - both profitable and growing businesses in Germany,' said Annika Falkengren, SEB President and Group Chief Executive. 'The retail business has one of the highest customer satisfaction rankings in Germany and serves one million customers,' Falkengren added. "We have spent significant time and effort restructuring the business since it was acquired more than 10 years ago. I am convinced that Banco Santander, as one of the largest banks in Europe and with a strong retail track record will be the best possible home for our retail banking business.'

The deal encompasses all SEB's 173 German branch offices, one million private customers and some 2,000 employees. At end-2009, loan and deposit volumes amounted to EUR 8.5 bn and EUR 4.6 bn, respectively, and risk-weighted assets to EUR 4.7 bn. The German retail banking business made an operating loss of EUR 117 mln in 2009.

The transaction price of EUR 555 mln is at a premium to allocated equity of EUR 420 mln. Transaction costs, including related funding and hedge accounting effects are estimated at EUR 375 mln.