Santander gains $1 billion from sale of US unit stake

Leading Spanish bank Banco Santander said Friday it will accrue a net capital gain of $1 billion (727 million euros) from the sale of part of its holding in its Santander Consumer USA unit.

Santander said the proceeds from the sale will be used to strengthen its balance sheet. The bank declared a core capital ratio of 9.2 percent at the end of June.

The sale will be executed by Santander Consumer USA increasing its capital by approximately $1.15 billion, with Sponsor Auto Finance Holdings Series, an entity held by funds affiliated with Warburg Pincus, Kohlberg Kravis Roberts and Centerbridge Partners, investing $1 billion in the company and Dundon DFS approximately another $150 million. The transaction values the company at $4 billion.

Following the capital increase, Santander will have a 65-percent stake in Santander Consumer USA, Kohlberg Kravis Roberts, Warburg Pincus and Centerbridge Partners through Sponsor Auto Finance Holdings Series 25 percent, and Dundon DFS 10 percent. Santander Consumer USA booked a profit of $455 million