Agreement with Zurich Financial Services Group
MATERIAL FACT
Banco Santander ("Santander" or the "Bank") and insurer Zurich Financial Services Group ("Zurich") have signed a Memorandum of Understanding to form a strategic alliance to strengthen insurance distribution in five key markets for Grupo Santander in Latin America, Brazil, Chile, Mexico, Argentina and Uruguay.
Santander will create a holding company made up of its insurance units in Latin America. Zurich will acquire 51% of the company and will manage the companies. Santander will retain a 49% stake and will enter into an agreement to distribute the alliance's insurance products in each country for 25 years.
The Santander insurance units included in the transaction would be valued at USD3.275 billion. Zurich will pay Santander 51% of that amount, USD1.670 billion, at the close of the transaction. In addition, during the 25 years of the distribution agreements, there is an earn-out mechanism for achieving specific profit performance targets and a mechanism that would protect against possible underachievement.
Through these aforementioned payments, the closing of this transaction, which is subject to final documentation and the appropriate authorisations from the different regulators, will generate for Grupo Santander, capital gains amounting to USD1.210 billion dollars, which will be assigned to reinforcing the Bank's balance sheet.
Boadilla del Monte (Madrid), February 22nd, 2011
This information is provided by RNS