Spain's Banco Santander (NYSE: SAN ) today announced plans to merge with and subsume its subsidiary, Banesto, as well as Banesto's private banking arm, Banif. Santander will buy back all Banesto stock at a 24.9% premium, the company said, and the new-look company will have 4,000 offices in Spain and more than 14,000 throughout the globe.
Cost savings of 520 million euros, or more than $680 million, will be achieved by the third year, according to a company press release. These savings will be enabled by "synergies," as well as the closure of 700 Banesto branches. The company said that job cuts as a result of these closures will be "implemented gradually."
Santander already owns almost 90% of Banesto's equity, and the nearly 25% premium to Banesto's closing stock price on Friday will be doled out to the remaining minority shareholders.
The Spanish banking system has been hit hard by the widespread macroeconomic problems in Europe, and Santander expects there will be 35% fewer total Spanish bank branches in 2015 than there were in 2007.
Santander, which has a nearly $80 billion market cap, was trading moderately lower at the time this article was written. The merger is scheduled to complete in May of next year.