* Santander says listing of U.S. car unit is a possibility
* Too early to talk of timing for the listing
* Analysts say right decision to list from capital viewpoint
* Group profitability could be weakened
By Jesús Aguado
MADRID, Nov 22 (Reuters) - Santander may list its U.S. car financing division to squeeze yet more cash out of overseas businesses to shore up its defences against weakness in Spain.
The Spanish bank said on Thursday it was still too early to discuss timing for a share sale of the business - Santander Consumer USA - something already proposed in a deal signed last year with its other shareholders.
"The possibility of an IPO (initial public offering) of Santander Consumer USA (SCUSA) is included in the shareholders' agreement signed in October 2011 with our partners," a spokeswoman for Santander in Madrid said.
The bank is under pressure from financial regulators to raise capital to cushion against potential troubles at home, even though it has weathered Spain's property market crash better than its rivals.
Santander has benefited from overseas expansion, which means it makes less than a fifth of its profit in Spain.
"Over all, selling off divisions is a right decision in order to avoid other costly ways of raising capital," said Maria del Paz Ojeda, banking analyst at the brokerage of Grupo Banco Sabadell. "But spinning off profitable business will contribute to making the group less profitable."
Spain became the focal point of the euro zone debt crisis earlier this year as it became clear its banks would need financial support to rid balance sheets of around 185 billion euros ($237.15 billion) of toxic real estate assets.
Santander's provisions for real estate exposure rose to 5 billion euros by the end of September, around 90 percent of the requirements required under Spanish law.
The bank has already listed its Mexican, Brazilian and Chilean arms and its Argentine and British businesses are expected to follow.
Santander's chairman Emilio Botin said during the $4 billion share sale of its Mexican business in September that the bank's goal was to list all its large units within five years.
The bank is counting on expectations of a recovery of the U.S. car market to make the sale of the car financing business attractive to potential investors.
"Santander is trying to take advantage of a slight recovery in the U.S. consumer market to give its business a greater value and visibility," said Maria Lopez, analyst at Espirito Santo.
Santander Consumer USA could be worth as much as $6 billion, according to the Wall Street Journal, which reported that the bank was planning a sale in the first half of 2013.
"Taking into account a $6 billion valuation for the Santander Consumer business in the USA this would imply a three times net asset value which seems a little bit high," Lopez said.
The Spanish bank said on Thursday the valuation would depend on the share price at the time of the sale.
The bank controls 65 percent of the Fort Worth, Texas-based SCUSA through a holding company. Private equity firms KKR & Co., Warburg Pincus, and Centerbridge Partners have a combined 25 percent stake. The remaining 10 percent belongs to Dundon DFS.
When Santander incorporated new partners in the subsidiary in October 2011 it valued the company at $4 billion.
Santander Consumer USA had assets of more than $24 billion at end-June and a second quarter profit of $459 million.
Santander shares were up 0.9 percent at 5.763 euros at 1500 GMT, while blue-chip index Ibex-35 was up one percent. Santander's shares have lagged other European banks as Spain drags its feet on requesting a sovereign bailout after it signed up for a credit line from the European Union worth up to 100 billion euros ($128.19 billion) to rescue its banks.