Santander expands British operations

4th August 2010, Comments 0 comments

Spanish banking giant Santander on Wednesday expanded further into the British marketplace, snapping up 318 branches from state-controlled lender Royal Bank of Scotland.

Bailed-out RBS, which is due to unveil first-half profits on Friday, said it would sell the bank outlets in a transaction worth about 1.65 billion pounds (2.0 billion euros, 2.6 billion dollars).

Santander UK chief executive Antonio Horta-Osorio hailed the announcement as an "important" step for the group, which already has 1,300 British outlets 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 small and medium-sized business sector.

The acquisition will see Santander add to the branches it already owns in Britain 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," said Horta-Osorio.

"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 stores 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 SME (small and medium-sized enterprise) customers and 1,200 mid-sized corporate customers.

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.

"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 taxpayers' stake in RBS."

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.

He added: "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."

© 2010 AFP

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