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Santander confirms London listing as UK profits rise

(Update) Santander will launch on the UK stockmarket next year, chief executive Alfredo Saenz said today, after the group reported rising UK profits set against a 9.8% decline at group level over the last nine months.

 
Santander confirms London listing as UK profits rise

Santander will launch on the UK stockmarket next year, chief executive Alfredo Saenz said today, after the group reported rising UK profits set against a 9.8% decline at group level over the last nine months.

The Spanish banking giant, one of the biggest in the world, was hit by bad debt provisions imposed by the central bank in its home country.

But in the UK, where the bank recently announced it was adding 318 RBS branches to its growing portfolio of high street operations, profits rose by 12.8% to £1.3 billion. The bank reported a 7% increase in loans, and 13% rise in deposits in the UK.

Saenz used a conference call after the release of the numbers to put an end to months of speculation about a UK listing: 'The decision of listing in the UK has been taken. Another thing is the exact timing. It's obviously going to be in 2011, and probably in the first part of the year, but the exact date isn't clear,' he said, according to a report on Dow Jones.

It has been previously suggested that Santander would seek to raise some £3 billion from a London flotation, in order to fund its further expansion. The UK division took £4.5 billion from group subsidiary Banco santander to help it pay for its RBS acquisitions.

The UK accounts for 18% of Santander’s overall profit. It began its UK expansion in 2004 when it acquired Abbey. Then four years later it bought Alliance & Leicester as well as Bradford & Bingley’s savings and branch network. Once it has finished rebranding the Alliance & Leicester branches by the end of this year, there will be some 1,300 Santander branches and 4,500 cash machines in the UK.

António Horta-Osório, who heads up Santander's UK division, said: ‘Our efficient cost base gives us a competitive advantage and enables us to offer superior value-for-money propositions to our 25 million customers.’

However there has been widespread criticism that the group has delivered competitive rates at the expense of customer service.

The rapidly expanding group trumpeted three significant acquisitions in the third quarter, including the acquisition of the RBS branches. This has led to concerns about the speed of Santander’s expansion.

However Saenz reportedly dismissed the prospect of further expansion: "The work we have in front of us now is more about consolidating and integrating what we've already bought.'

7 comments so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Oct 28, 2010 at 11:50

Have experienced total lack of service and uncorrected mistakes in both Abbey and Alliance & Leicester Accounts, Will be moving both soon.

it is probably their mistakes that are giving them profits in the UK rather than anything else.

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LANDLORD X

Oct 28, 2010 at 13:33

Santander customer service is total crap

Avoid them at all costs

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Drake

Oct 28, 2010 at 15:16

I'm still puzzled (ie sceptical) as to how a major lender to the bust Spanish property sector has avoided the bad problems the other banks have suffered.

I'll bet it's not the Spanish parent that will be listing in London. And I'll bet that the proceeds of the listing will go straight back to Spain to repay the intra-group debt, leaving the listed vehicle with assets (UK branches) and no cash. Am I being too cynical?

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snoekie

Oct 28, 2010 at 23:11

And my existing Abbey (oops, Santander) shares?

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Drake

Oct 29, 2010 at 09:37

Snoekie,

I think you'll find that Abbey is owned by the British holding company which will be listed in London. That is a subsidiary of Santander, which is listed in Madrid. You have shares in the Spanish listed parent. You will not get shares in the new Santander UK unless Santander decide to offer them for subscription by its British shareholders.

So you are exposed to the Spanish market, whilst the new shareholders in Santander UK will only be exposed to the British market. So your risk profile has switched from UK to Spain.

Santander, if this is wrong please let me know.

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robert munro

Oct 29, 2010 at 19:27

I'm prepared to gamble a little on Santander shares (nothing I can't afford to lose).

And I need a euro investment as nearly everything else I have is reliant on the UK and hasn't shown any growth after over 10 years! Just as well I get the divis.

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Drake

Oct 30, 2010 at 11:59

Robert,

The point I am making is that the Santander shares you now own are a euro investment (albeit in one of the weakest economies in Europe). The Santander UK shares that will be offered for sale will be a UK investment (with assets in Abbey and other UK high street outlets it has bought recently). It is a different company.

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