FirstBank to buy Santander's Puerto Rico operations for $1.1 billion

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FirstBank Puerto Rico will buy Santander’s retail and commercial banking operations on the island in a deal slated to close in mid-2020.

Banco Santander Puerto Rico has 27 branches on the island, $6.2 billion of assets, $3.1 billion of loans and $5 billion of deposits. It also has about 1,000 employees. FirstBank Puerto Rico will pay $1.1 billion, or 1.1 times the total book value.

Aurelio Alemán, president and CEO of FirstBank’s holding company, First BanCorp., said in a press release late Monday that the acquisition would “significantly improve [its] scale and competitiveness in Puerto Rico.” FirstBank had about $12.5 billion in assets as of June 30. After the deal closes, it will have $17.6 billion of assets, $12 billion of loans and $14.2 billion of deposits.

“The Banco Santander Puerto Rico team expands our talent bench in retail, commercial and business banking,” he said. “First BanCorp will become a stronger competitor in Puerto Rico with the scale and breadth to better serve retail and commercial customers, and increase our financial investments in innovation and talent development.”

Banco Santander Puerto Rico is the fourth-biggest bank in Puerto Rico, with a 6.8% deposit market share, according to June 30 data from the Federal Deposit Insurance Corp. FirstBank Puerto Rico was the third-largest, with a deposit market share of 8.8%.

In its own announcement, the U.S. unit of the Madrid-based Banco Santander said it was not exiting Puerto Rico entirely. Its auto lending unit, Santander Consumer, will continue to operate on the island, and Santander will also retain a loan portfolio with a net valuation of $220 million.

“Once completed, the transaction will provide the combined FirstBank Puerto Rico and Santander Bancorp Puerto Rico the ability to offer a broad array of retail and business banking products and services, with the scale to compete through an enhanced branch network to the benefit of both banks’ current and future customers,” Scott Powell, CEO of Santander Holdings USA, said in a separate press release.

Earlier this year, Santander Bank agreed to sell 14 branches in Central Pennsylvania to First Commonwealth Financial in Indiana, Pa.

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M&A Commercial banking Consumer banking Santander Santander Consumer USA Puerto Rico