Erste acquires 49% stake in Santander’s Polish unit for $7.7 billion

Austria’s Erste Group Bank acquired a 49% stake in Santander’s Polish unit for around 6.8 billion euros ($7.7 billion), Santander and Erste said Monday, driving shares in Santander Bank Polska down around 5% in Warsaw.

Santander and Erste also reached a deal for Erste to acquire 50% of the Spanish lender’s Polish asset management business for 200 million euros, they said.

Erste said it would fund the acquisitions exclusively from internal resources.

Its shares jumped 6.46% while those in Santander were up 0.3% by 0830 GMT.

Santander, the euro zone’s biggest lender by market value, said it would use part of the proceeds to grow organically in Europe and the Americas.

Both banks also announced a strategic cooperation in corporate & Investment Banking (CIB), and to allow Erste to gain access to Santander’s global payments platforms, Santander said.

The all-cash transaction of 584 zlotys ($155) per share valued Santander Bank Polska at 2.2 times first quarter 2025 tangible book value per share or overall 13.88 billion euros.

Under Polish takeover law, a bidder does not need to make a mandatory takeover offer if it holds less than 50% of the votes of the target company.

The Polish unit of Santander is the country’s third largest bank by assets, and also one of the most profitable on the market that, unlike the euro zone with the European Central Bank’s increasingly dovish sentiment, has been enjoying high interest rates for more than two years.

Santander said it intended to distribute 50% of the capital released from the sale to shareholders upon completion, which will be equivalent to a share buyback worth about 3.2 billion euros. This payout would accelerate the delivery of its up to 10 billion share buyback target for 2025 and 2026.

Erste Group’s funding of the acquisition is supported by the cancellation of a 700-million euro share buyback program, temporarily reduced dividend payout ratio and various balance sheet optimization measures, it said.