First BanCorp., the parent company for FirstBank Puerto Rico, announced it has received the requisite regulatory approvals local and federal banking regulatory agencies to wrap up its acquisition of the Puerto Rico operations of Banco Santander Puerto Rico.
First BanCorp. got the go-ahead from the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and the Puerto Rico Office of the Commissioner of Financial Institutions.
The financial institution expects to close on the transaction by Sept. 1, banking officials said.
“We’re very pleased to have received regulatory approvals for this transformational transaction for our corporation,” said Aurelio Alemán, First BanCorp. CEO.
“We expect that this acquisition will significantly improve our scale and competitiveness in Puerto Rico and will be financially compelling to optimize the use of our excess capital,” he added.
First BanCorp. announced in October 2019, the signing of a stock purchase agreement for FirstBank to acquire Spanish bank Banco Santander Puerto Rico in an all-cash transaction worth $1.1 billion, as this media outlet reported. However, bank officials said today that the final value of the deal will be determined upon closing.
On a pro forma basis based on June 30, 2020, upon closing of the transaction, FirstBank expects to have approximately $18.8 billion in assets, a $12 billion loan portfolio, $15.4 billion of deposits, and approximately 650,000 customers.
In addition, FirstBank expects to have 450 ATMs, 73 branches, and more than 3,500 employees across the Corporation.
“We have been preparing for a strategic transaction of this magnitude and have been working diligently on integration planning. The Santander team expands our talent bench in retail, commercial and business banking,” Alemán said.
During a conference call with analysts to discuss the quarter’s results, Alemán said “over the past few quarters, we have incurred expenses associated with the transaction of about $50 million already.”
“We have impacted our bottom line and turnover book value already. Also, obviously, that will reduce the remaining quarter going forward. And I think it’s important to note here that, given the timing, most of the savings of the transaction and the synergies will occur in 2021,” he said.
“First BanCorp will become a stronger competitor in Puerto Rico with the scale and breadth to better serve customers, and further our investments in innovation and talent development. We are greatly appreciative of expanding our client base and we will work hard to continue enhancing our portfolio of products, services and channels to meet their needs and exceed their expectations,” said Alemán.
Upon closing and for a transitional period until the conversion of systems is completed, FirstBank plans to continue using certain of Santander’s technology platforms on a transitional basis.
As a result, current Santander customers will continue to transact as they currently do without any impact to their service as a result of the transaction.
In addition, upon closing of the transaction, Santander’s customers will be able to use all FirstBank ATMs without out of network fees.