Missing link

19 February 2014 By Fiona Maharg-Bravo

The Spanish bank is in talks to finance Peugeot’s future sales in 11 European countries as the French state leaves the carmaker’s finance arm. Santander gets access to millions of captive clients and some legacy loans at a discount. Peugeot will benefit from cheaper funding.

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Santander, Spain’s largest bank, has started negotiations for a 50/50 joint venture with French carmaker Peugeot’s auto lending division, Banque PSA Finance.

Under the proposed terms, Santander’s consumer unit would provide funding for all of Peugeot’s future business in 11 European countries. It would also purchase some of Banque PSA’s existing loans.

The tie-up, covering 90 percent of Banque PSA’s activities and due to start in mid-2015, will lead to the unit’s separation from the French carmaker. The latter said the deal would provide “potential cash upstream up to 1.5 billion euros” by 2018.

Santander is a leading provider of auto finance in Germany, Spain and the UK. Its consumer finance unit made 1.2 billion euros in net profit in 2013, of which 794 million euros was in Continental Europe. The unit has a portfolio of 81 billion euros in loans worldwide, of which 53 billion are to German clients.

Banque PSA made 368 million euros in operating income in 2013 on total outstanding loans of 21.3 billion euros.

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