Santander injects US$7.9 billion in its finance company in Brazil

Santander has decided to inject R$40 billion (€7.8 billion, US$7.9 billion) into the capital of its consumer finance company in Brazil, Aymoré Crédito.

The Spanish group is carrying out this operation through the Rio de Janeiro franchise, on which the company depends, using further increases, which began in May and will culminate soon with the disbursement of R$10 billion once it receives the pertinent authorizations.

Santander sources tell The Objective that this injection is due to the change in the bank’s strategy for raising funds from the finance company to develop its business.

To date, Aymoré Crédito was fed by the deposits and accounts of the Brazilian franchise’s clients. From now on, it will have its own funds to be able to grant loans to users.

With this decision, the Spanish group intends to optimize resources and save operating costs.

Deposit-taking has become more expensive for banks in Brazil due to the interest rate hikes undertaken to curb inflation.

The official price of money in the Latin American country stands at 13.75% after twelve consecutive increases. The last one occurred in August, and forecasts indicate further increases.

SANTANDER’S FINANCE COMPANY IS THE LEADER WITH A 23% MARKET SHARE

Aymoré Crédito is the subsidiary with which Santander operates in the consumer finance business in the Rio de Janeiro market, its primary source of profits.

The company boosted its activity and expanded its leadership, improving its share in the sector in the first half of the year.

It now controls 23% of loans for all types of goods and 25% in the automobile segment. The latter, as in the rest of the country, is the main driver of the finance companies of the bank presided by Ana Botín.

Santander has more than 100 agreements with vehicle manufacturers to offer loans for their acquisition.

The alliance sealed with Stellantis (Fiat, Chrysler, Peugeot, and Citroën) stands out in Europe and the United States. In Brazil, the pact that has existed for years is with RCI Bank, Renault and Nissan’s finance company.

According to data from 2021, Aymoré Crédito reported profits of R$160 million, 7% of Santander’s profits in the Rio de Janeiro market.

At that time, the country contributed R$2.3 billion to the group’s profits, almost 29% of the total. The weight of the finance company is still much lower than that of its similar subsidiaries in other geographical areas, such as the USA and Europe.

In North America and Europe, its key business division is dedicated to consumer loans. That is the case in Germany, France, Italy, Poland, and the Netherlands.

In other countries, such as Spain, the United Kingdom, and Portugal, its influence on the group is less relevant but just as strategic.

Recently, Santander has taken a new step to grow in Europe in this business and has recently acquired a financial leasing firm, an operation in which it has allocated €21.3 million (US$21.6 million).

The company in question is Riemersma, which was owned 33.3% by ING and 66.7% by asset manager Lathouwers Beheer.

The Cantabrian group includes the activity of its financial services company in Europe in its new Digital division, which includes Openbank.

This unit is present in 16 countries, in addition to China and Canada. According to its latest figures, at the end of June, this division had more than 19 million credit contracts and other contracts with 19 million customers.

A few months ago it extended its presence to Argentina through this division by launching Openbank.

Despite the supply crisis and the slowdown in the economy due to rising inflation and tensions in the energy market following Russia’s invasion of Ukraine, Santander is confident in the good performance of the consumer business both in the Old Continent and in Brazil and other markets.

Businesses to which it is adding more and more product lines and services.

With information from The Objective