Santander has sold Santander Bancorp, the bank's retail and commercial banking franchise in Puerto Rico, to FirstBank Puerto Rico in a deal valued at around €1bn.
The operation includes Santander's 27 branches and 1,000 employees on the island, with total assets of €5.6bn.
The transaction is expected to close in the middle of 2020, subject to regulatory approvals. Its consummation will lead to an increase in the Group's CET1 capital of 5-6 basis points and immaterial impact on Santander Group attributable profit, the Spanish lender said in a note.
Scott Powell, chief executive officer of Santander Holdings USA, Inc. said: "We are pleased to reach this agreement with FirstBank Puerto Rico. FirstBank Puerto Rico shares our values and our commitment to customers, and the local communities.
"Once completed, the transaction will provide the combined FirstBank Puerto Rico and Santander Bancorp Puerto Rico the ability to offer a broad array of retail and business banking products and services, with the scale to compete through an enhanced branch network to the benefit of both banks' current and future customers."
FirstBank Puerto Rico, which is headquartered in San Juan, has combined total assets of more than $17bn.
As of the end of June, Banco Santander had €1.03trn in customer funds (deposits and mutual funds), 142 million customers, 13,000 branches and 200,000 employees. It made underlying profit of €4.04bn in the first half of 2019, an increase of 2% in constant euros compared to the same period last year.