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Banco Santander S.A.,
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FINCEN
Administrative Assassin


Joined: 08 Mar 2006
Posts: 1334

PostPosted: Fri Dec 09, 2011 11:02 pm    Post subject: Banco Santander S.A., Reply with quote

Banco Santander Brasil S.A., a subsidiary of Europe’s largest bank has sold nearly $9 million worth of bad loans in 2011. According to a Wall Street Journal estimate this is the equivalent of 9% of Santander Brasil’s total loan portfolio. Sources say Banco Santander aggressively sought to move their entire loan portfolio and offered to sharply discount the purchase price for anyone willing to take on their debt laden loan book. The announcement came on the heels of a move designed to boost the banks capitalization where they sold a 7.8% stake in its Chilean business unit for $950 million. Santander has also announced plans to sell all of its Columbian business that includes Banco Santander Colombia to Chile’s CorpBanca. Santander and CorpBanca have yet to finalize the terms of sale but early estimates place the total value of Santander Colombia at $818 million. Other planned or recently completed Santander transactions include a proposed sale of 8% of its Brazilian business unit for $3.5 billion, a recently completed sale of its U.S. auto-loan unit for an estimated $1 billion as well as the proposed exchange some of its outstanding bonds, a move aimed at raising 600 million.

All of these moves come at a time when a recent report rated Santander among the worst Eurobank’s with accusations ranging from harassing collections calls to the repossession of deployed U.S., military personnel. Long plagued by allegations of money laundering, Banco Santander S.A., “already ranked third in Mexico in terms of deposits and loans with more than a 12% market share in both areas,” is an interesting business strategy unlikely to alleviate the suspicions as to their interest in such a violence prone country. Banco Santander admits whereas most of its other South American business units are saddled with debt, Mexico stands as a major source of profit representing 10% of its profit year to date. Santander is planning to grow its Mexican loan portfolio for mortgages, consumer credit and small businesses by more than 30% over the next 12 months. Consider this strategy in context with their plans to maintain a rather modest presence in loans to local government entities by limiting that segment of its banking portfolio to 3% versus the 10% industry average. Banco Santander expects the Mexican economy to produce an annual increase for the bank resulting in a profit of 15 to 20% in 2012 and 2013. The justification for their optimism is an expectation of growth in Mexico’s business sector and “population dynamics that favor greater use of financial services.” Over a 12-month span ending in September, Banco Santander reported a hefty 15.3% return on investment from its Mexican operation. Marco Martinez head of Santander’s Mexico division said this was possible because “the country has not been impacted by the problems in Europe and the U.S… ‘because’ “…our domestic economy has shown strength that year’s ago it didn’t have to withstand external shocks.”

Banco Santander’s Mexican operation was recently expanded thru the purchase of a 25% stake in Bank of America a deal worth an estimated $10 billion. The company also became the second largest private provider of mortgages with the $2 billion purchase of a portfolio formerly held by General Electric. The question is how much of Banco Santander’s optimism in the strength of Mexico’s economy is based on the expected growth and expansion of the narco-economy, a hedge many financial institutions have taken against global currency devaluations. Banco Santander was one of a number of Brazilian investors who took a beating when Brazilian authorities moved to arrest the appreciation of their currency as foreign investors drawn by double digit interest rates steadily drove their currency higher thereby increasing the risk of inflation and a hard economic collapse. Hedging currently accounts for 50% to 70% of the turnover of euro/real options. This increases risk to volatile currency shifts as investing institutions are left without an outlet to unload risky deals such as those contained in Santander’s Brazilian and Columbian portfolios. Action’s such as Brazil’s proposed derivative tax and subsequent basis-point rate cut. The result was a 17.8% drop in value for Brazil’s currency in comparison to the dollar and a 13.7% decline in relation to the euro. The probable cause of Santander’s interest in Mexico can be found in a 1999 federal reserve order that Banco Santander S.A., address deficiencies in its anti-money laundering programs. The order arose out of an investigation into improper activities attributed to two employees associated with Banco Santander Mexicano, S.A., involving unspecified improprieties. At the time it was noted that Banco Santander did not engage in residential mortgage lending but through an affiliate ‘Santander Mortgage Corporation’ offered affordable first time buyer programs sponsored by the Government National Mortgage Association.
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beemoe
Commission Member


Joined: 07 May 2006
Posts: 838

PostPosted: Sun Jan 29, 2012 11:03 pm    Post subject: Beemoe Reply with quote

So this expansion (in Mexico) is a cover for further laundering profits. Is there an aspect where Santander is laying it`s bad loans on the tax-paying public? That seems to be the ultimate goal for most of these operations.
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beemoe
Commission Member


Joined: 07 May 2006
Posts: 838

PostPosted: Sun Jan 29, 2012 11:13 pm    Post subject: Beemoe Reply with quote

This is what you mean by organizations using the drug trade to shore up bad financial practices? It`s funny a bank being so open about courting the drug trade.
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