Chilean bank Bci has agreed to pay $528 million for Banco Popular’s Florida-based subsidiary TotalBank, a move that sees the business doubling down on its US business bet.
The Chilean bank expects the deal, which is subject to regulatory approvals, to close in the second half of 2018, according to a statement Bci filed with its local market regulator.
News of Bci’s intention to buy TotalBank for about $500 million first emerged in April, though a month later it became public that Banco Popular had rejected the Chilean bank’s initial offer as it wanted a higher bid.
This is Bci’s second deal in the US. It became the first Chilean bank to acquire a US financial institution when it purchased Florida-based City National Bank for more than $900 million in 2015.
The purchase of Popular’s subsidiary will occur through City National Bank, which will acquire 100% of TotalBank’s shares, according to Bci’s statement. TotalBank will then be incorporated into City National Bank, it said.
‘TotalBank is a logical target given its segment similarities, geography in which it operates and its healthy and diversified portfolio,’ said Bci’s chief executive Eugenio Von Chrismar.
TotalBank, a $3.04 billion retail and commercial bank which also has a private banking operation, had been 100% owned by Popular since 2007.
In April, it emerged that Banco Popular, facing cash constraints, wanted to sell TotalBank to raise capital.
Two months later, the European Central Bank deemed Popular as ‘failing’ after finding the institution couldn’t meet its debt obligations, which triggered a sale to the Santander group for the symbolic price of one euro.
In announcement of the TotalBank sale, Santander executive chairman Ana Botín said Santander had strengthened Popular’s metrics since the acquisition, but that the Florida-based firm didn’t fit Santander’s business plans.
‘While TotalBank is an excellent franchise, it is not a natural fit with our existing US business,’ she said, according to the statement. ‘We are therefore pleased to announce the sale to BCI who are well positioned to grow the business going forward.’