Spain-based banking group Banco Santander has entered into a cooperation agreement to purchase 8% equity stake in Bank of Shanghai (BoS) from HSBC, allowing it to become the second-largest shareholder in BoS.
The cost of the investment, including HSBC’s stake and the cooperation agreement with BoS is estimated to be around 470m.
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As part of the deal, Santander will provide BoS with risk management and commercial and retail banking solutions. Both the firms will develop joint wholesale banking activities.
The stake in BoS, along with the strategic agreement, will allow Santander to strengthen its position in the country, where it is also developing investment banking activities based on financing the substantial trade flows between China and Latin America.
In China, Santander currently has branches in Shanghai and Hong Kong, and a representative office in Beijing, which will be turned into a branch soon, claims the bank.
The BoS transaction, which is subject to approval from the China Banking Regulatory Commission, is expected to be completed in the first half of 2014.
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