June 17, 2014 / 3:57 PM / 4 years ago

UPDATE 1-Santander Totta eyes Portuguese commercial assets of BBVA

(Adds detail, quotes)

By Laura Noonan

LISBON, June 17 (Reuters) - Santander Totta, the Portuguese offshoot of Spain’s Santander,is eyeing the local commercial loan books of Barclays and BBVA, chief executive Antonio Vieira Monteiro told Reuters on Tuesday.

“We are studying ... the commercial portfolio. The retail network we are not interested in,” Monteiro told Reuters, referring to BBVA’s Portuguese unit. “We are looking and in the end we’ll see if we are doing a proposal or not.”

Santander has remained committed to Portugal while other international banks including Barclays and BBVA are reportedly set to leave a market that has just emerged from its longest recession in 25 years and cast off its sovereign bailout.

Monteiro would not say when he would take a decision on any BBVA bid but said his bank was interested in similar assets held by Barclays, which is shrinking its European operations to concentrate on its core UK business.

Barclays, which had 765 million pounds ($1.28 billion)of Portuguese corporate loans at the end of last year, and BBVA, which had 4.9 billion euros of loans in Portugal at June 2013, both declined to comment.

Santander Totta had just over 27 billion euros of loans at the end of last year, but its loan book shrunk marginally in the first quarter amid muted demand.


Monteiro also said Santander Totta will take some of the 400 billion euros ($544.60 billion) the European Central Bank has set aside for a four-year low-cost funding scheme to encourage banks to lend to the real economy.

“I don’t know (how much), I will take what I need,” he said. “I will do the additional lending, yes, but what I am not doing is additional lending to bad companies, this is out of the question.”

The ultra low cost of the ECB money, which is fixed at 0.25 percent would help boost Santander Totta’s earnings, which are already above the average for Portuguese banks.

Monteiro hopes to grow Santander Totta’s return on equity to 12 to 16 percent by 2016, from last year’s 5.1 percent, as earnings rise to 400 million euros from last year’s 102 million euros.

This year’s figures will be helped by the release of a “lot of” the provisions the bank has already set aside for loan losses, since it had received more money back from struggling customers than expected, Monteiro said.

The bank set aside 710 million euros for loan losses between 2012 and 2013, but loan losses for the first quarter of 2014 almost halved to just under 33 million euros.

$1 = 0.7345 Euros $1 = 0.5956 British Pounds Reporting By Laura Noonan, additional reporting by Steve Slater in London, Editing by Axel Bugge and David Evans

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