( FOX News ) - GE through its GE Money and Commercial Finance business units, and Banco Santander have reached a non-binding agreement on the acquisition of certain businesses from each other. The transactions are valued at approximately EUR 1 billion.
Under the terms of the preliminary agreement, Banco Santander will acquire GE Money's businesses in Germany, Finland and Austria, and its card and auto businesses in the UK, while GE Commercial Finance will acquire Interbanca, the Italian commercial bank assigned to Santander as part of the distribution of assets following the acquisition, together with Royal Bank of Scotland and Fortis, of ABN Amro.
Banco Santander expects to integrate the GE Money units acquired, with total assets of EUR 9 billion, into Santander Consumer Finance and Santander Cards. Interbanca would become part of GE Commercial Finance, providing GE with an enhanced capability to service mid-market banking businesses in Italy.
"We believe this agreement is in the best interest of GE Money, our individual businesses, and GE's shareholders, and allows us to optimize our portfolio for continued growth and investment, while meeting one of GE's strategic objectives of redeploying capital within financial services," said William H. Cary, President & CEO of GE Money.
"This transaction will enable Banco Santander to continue consolidating Santander Consumer Finance as one of the industry's leaders in Europe," said Magda Salarich, Senior Executive Vice-President and head of the Santander Consumer Finance Division.
The transaction is subject to the completion of definitive agreements and certain regulatory approvals.