Santander buys RBS branches to expand British operations
Spain's biggest bank Santander expanded further into the British marketplace on Wednesday, snapping up 318 retail branches from state-controlled lender Royal Bank of Scotland.
Bailed-out RBS, which is due to unveil first-half profits on Friday, is selling the bank outlets in a transaction worth about 1.65 billion pounds (2.0 billion euros, 2.6 billion dollars).
RBS, 83-percent owned by the British government, is selling assets in line with a demand made by the European Commission in exchange for the state aid it received during the global financial crisis. Union bosses said the sale would stifle competition.
Santander UK chief executive Antonio Horta-Osorio hailed the announcement as an "important" step for the group, which already has 1,300 British branches after a series of carefully-timed takeovers over the last six years.
"This is a very important strategic deal for Santander in the UK that builds on our retail strength," he said, adding the transaction will expand its activities in the small- and medium-sized (SME) business sector.
The acquisition will see Santander add to the branches gained after its takeovers of Abbey in 2004 and Bradford & Bingley and Alliance & Leicester in late 2008 at the height of the financial crisis.
"Through the Abbey, Alliance & Leicester and Bradford & Bingley acquisitions, Santander UK has demonstrated that it can integrate complex and large-scale businesses successfully," Horta-Osorio said.
"The process of transferring the ... branches, together with associated customers and accounts, will take place towards the end of 2011."
The sale comprises 311 RBS-branded outlets in England and Wales, and seven NatWest-branded branches in Scotland, and also includes customer accounts attached to those branches. The deal is expected to conclude in December 2011.
Together, the 318 branches serve 1.8 million retail customers, 244,000 SMEs and 1,200 mid-sized corporate clients.
"This is an important milestone in our restructuring work and complements the significant momentum behind our recovery plan overall," said RBS chief executive Stephen Hester.
"The bank is becoming stronger, which allows an increased focus on serving ongoing customers and improving commercial success; all a pre-requisite for the profitable realisation of the taxpayers' stake in RBS."
RBS shares closed virtually unchanged at 52 pence, while Santander fell 0.34 percent to 10.34 euros.
Unite, Britain's biggest trade union, slammed the deal and argued that it would not spark greater competition for retail banking customers.
"The decision by Santander to buy 318 Royal Bank of Scotland branches does not address the concerns of the European Union for diversity and competition on the high street," said Stuart Davies, Unite officer for RBS.
"Santander already own branches of Abbey National, Alliance & Leicester and Bradford & Bingley. There is a danger that British customers will have a dwindling number of providers to choose from," Davies added.
Santander last week said its second quarter net profit fell nearly 8.0 percent to 2.23 billion euros as weakness in its domestic market offset solid growth in Latin America.
© 2010 AFP