Banco Santander sells stake in Brazil unit to Qatar for $2.7 bn

Spain' s largest and the world' s fourth-largest bank by profits Banco Santander SA said Monday that it has agreed to sell 5-per cent stake in its Banco Santander Brazil (BSB) to Qatar Holding, the gas-rich gulf state's investment arm for $2.7 billion.

Under the deal, Qatar Holding would subscribe to a mandatorily exchangeable bond issue by BSB for its existing or new shares. The bonds will carry a coupon rate of 6.75 per cent and have a tenure of three years.

On maturity, the bonds will be converted into BSB shares at a price of 23.75 reais ($14) per share.

Banco Santander chairman Emilio Botin said, '' I am delighted with Qatar Holding' s important investment in Banco Santander Brazil. This agreement is the first step in our relationship with Qatar Holding as a strategic partner in Brazil and the rest of Latin America.''

'' This investment will enhance our diversification as well as the Group' s capital,'' Botin further said.

Sao Paulo-based BSB, a subsidiary of Banco Santander is the third-largest private bank in Brazil by assets, behind only the Itau Unibanco and Banco Bradesco. The bank provides the complete range of financial services and has over 9 million customers. The lender has a network of over 3,600 branches and nearly 18,200 ATMs.