SANTANDER is to buy a majority stake in the personal finance arm of department store El Corte Ingles.
The country’s biggest bank by assets will buy 51% of the consumer finance division of the world’s third-largest department by sales.
The deal will see the El Corte Ingles finance department integrated into Santander Consumer Finance, easing the retailer´s debt burden and consolidating the bank´s position as Spain´s largest consumer lender.
The purchase will be the bank’s first significant investment in Spain since the onset of the financial crisis.
It will also go some way towards easing the €5 billion debt pile run up by El Corte Ingles as a result of a sharp fall in profits over the past five years.
The family-owned department store, founded in 1935, has faced stiff competition from cheaper rivals such as Mercadona, Dia and Zara owner Inditex since the downturn, resulting in a profit fall from €716 million in 2007 to €210 million last year.