Santander confirms offer for 300 RBS branches

Royal Bank of Scotland (LON:RBS) shares gained this morning after Spanish banking giant Santander confirmed it had made a bid for 300 British branches of the part-nationalised bank in a deal reportedly worth around £1.8bn.

Kate Neilson
shareprices.com - Friday, June 18, 2010

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RBS has received an offer for its 300 branches from Santander

RBS is selling its Williams and Glyn’s subsidiary, relieving it of 318 branches after the European Commission ruled last year that it must dispose of the business as a condition of the bank being bailed out by the UK Government. The bank, 84 per cent owned by the British taxpayer, has to sell the branches and its insurance arm and has until 2013 to sell the assets.

The branches initially attracted Virgin Money, National Australia Bank (NAB), Spainsh bank BBVA, The Wellcome Trust and US private equity group Blackstone. However, the bid turned into a two horse race with Santander and NAB making the decision to looks at RBS’s books last month. But with NAB dropping out, reportedly due to the group wanting to focus more attention on Asia, Santander became the sole interest in the branches.

Santander is the eurozone’s biggest bank and despite European debt fears is looking to further increase the size of the business. It already has a strong presence on the UK high street after it acquired Abbey National, Alliance & Leicester and Bradford & Bingley. According to reports, if the bid is successful, Santander would hold 14 per cent of the UK mortgage market and 10 per cent of savings.

Deputy Chairman of Santander, Matias Rodriguez, said in a conference yesterday: “We have made an offer for the offices of RBS which fit like a glove”. And The London Stock Exchange also released confirmation this morning in a statement saying: “Currently, it is not possible to say when the tender process will conclude”.

The share price for RBS gained as much as 2.2 per cent during early trading. However, the price has come down with a reduced gain of 0.3 per cent to 46.82p with the banking sector struggling as a whole before midday.

Barclays (LON:BARC) is marginally up by 0.2 per cent, however Lloyds Banking Group (LON:LLOY) and HSBC (LON:HSBA) are both in negative territory with the shares down 0.6 per cent.

The banking sector drops have accounted for the FTSE 100 index dropping to 0.07 per cent down, potentially ending chances of an eighth successive day of growth for the blue-chip index.

 

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