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Santander Agrees to Acquire Auto Loan Assets from Citigroup

June 29, 2010

DALLAS — Santander Consumer USA, an affiliate of Banco Santander, has reached an agreement with Citi to purchase $3.2 billion of CitiFinancial Auto's auto loan portfolio. In addition, Santander and Citi have entered into an agreement under which Santander will service a portfolio of approximately $7.2 billion of auto loans that will be retained by Citi.

The deal, which has Santander purchasing the $3.2 billion portion of the portfolio at a price equal to 99 percent of the value of the gross receivables, is expected to close in the third quarter of 2010 and is subject to regulatory approvals. Upon completion, this transaction will reduce GAAP (generally accepted accounting principles) assets in Citi Holdings by approximately $3.2 billion.

Citi officials said the sale is consistent with the company’s strategy to reduce the assets and businesses within Citi Holdings, its portfolio of non-core operating businesses and assets. Officials added that the company will continue to pursue opportunities to divest Citi Holdings assets.

Officials with Santander said they expect the deal to have a positive impact of 1.3 percent on its earnings per share from the first year and a 15 percent return on investments from the third year. The company was also bidding for 318 branches of the Royal Bank of Scotland Group plc., and recently announced that it will buy back a 24.9 percent stake in its Mexican arm, Grupo Financiero Santander, from Bank of America for $2.5 billion.

Other terms of the sale were not disclosed. The sale also is not expected to have a material impact on Citi's net income.

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