Santander execs at odds over IPO timing
TOP executives at Grupo Santander want the bank’s UK division to go public earlier than its London management would like, City A.M. has learned.
Madrid and London are in disagreement over the timing of the float, with the Group’s leadership keen to press ahead this year and the bank’s UK execs more inclined to wait for better market conditions, a source familiar with the situation has told City A.M..
Santander UK’s float, which is expected to raise some £4bn, has been “pencilled in” for November, but given rocky conditions in London’s initial public offering (IPO) market, it is understood that the bank’s UK management is prepared to wait until 2012 to list.
However, Grupo Santander wants to see growth from the UK business more quickly. On Friday, group chief executive Alfredo Saenz told shareholders: “An important priority in the UK is to carry out the IPO as planned during the second half of 2011.”
The Group recently gave its London subsidiary, which is led by new CEO Ana Botin (pictured), a £4.5bn equity capital injection to fund its purchase of 318 RBS branches, and it is understood that a portion of any proceeds from a UK float would go back to Madrid.
In presentations to investors, the group’s senior management have also cited the London float of Santander UK as a source of cash that will help the bank make the transition from Basel II capital requirements to the more stringent Basel III regime.
But some investors regard the Group’s high valuation expectations as unrealistic given the state of the UK float market and the discount on British banks’ share price.
One blue-chip investor in European banks told City A.M. that Madrid could be adjusting its expectations: “I struggle to see that they think they can get the valuation they thought they could get a year ago,” the investor said.
City A.M. also understands that JP Morgan is now a contender for the book-running syndicate that will advise on the deal. Bank of America Merrill Lynch is still considered a front-runner to lead the float, with Credit Suisse unlikely to secure a leading slot.
Santander declined to comment.