SPANISH giant Santander fired a warning shot across the bows of UK lenders yesterday, agreeing to buy 318 branches from Royal Bank of Scotland and preparing to reshuffle its global operations.
Santander will become the fourth-largest bank on the high street after it takes over the outlets from RBS for £1.7bn. The deal, due to complete by the end of next year, will give Santander 1,643 UK branches – more than HSBC but fewer than Lloyds Banking Group, RBS and Barclays. Its retail market share will grow to 12 per cent.
The news came as Santander’s European parent pumped £4.5bn capital into its UK subsidiary in the form of a loan. Part of the cash will be used to pay for the RBS assets, while the rest will be used to transfer the bank’s global insurance, credit card and asset management businesses to its UK balance sheet.
The funds are likely to be repaid to Santander’s parent with capital raised through a partial flotation of its UK arm, a source said. The division includes the former Abbey National and Alliance & Leicester building societies, as well as parts of Bradford & Bingley.
RBS, which was forced to dispose of the branches under European Union rules on state aid, booked a £350m profit on their net asset value at the end of 2009. The 83 per cent taxpayer-owned institution will also this week announce the sale of its payment processing business to private equity firms Advent International and Bain Capital for up to £2.5bn. RBS is expected to keep a 20 per cent stake.