Italian telecommunications company TIM has signed an agreement with Santander Consumer Bank to offer consumer finance services.
Both the firms will set up a joint venture firm (JV) that will provide financial services to serve Italy-based customers of TIM.
Initially, the JV will offer loans to purchase electronic devices. Gradually, the services will be expanded to include other consumer finance and insurance products.
Santander Consumer Bank, the local affiliate of Santander Consumer Finance, will be the majority stakeholder in the new JV with a 51% holding. The remainder will be owned by TIM.
The company is expected to begin operations next year.
TIM CEO Luigi Gubitosi said: “This strategic joint venture will allow us to free up capital and reduce credit risk, at the same time supporting our sales and broadening TIM’s revenue base towards new profitability opportunities.”
The deal is aimed at further bolstering Santander Consumer Finance’s position in the consumer finance services space in Italy.
Part of Banco Santander group, Santander Consumer Finance currently operates in 15 European countries. It has a client base of around 20 million.
Established in 1857, Banco Santander is said to be the largest bank in the Euro zone by market capitalisation.
As of 30 June 2019, Banco Santander reported €1.03 trillion in customer funds and 142 million customers.
Earlier this week, the group signed an agreement to acquire a majority stake in UK fintech Ebury.