Having made the most of the credit crunch by merrily acquiring what seems to be the majority of its less fortunate competitors, Spanish bank Santander looks set to continue its seemingly never-ending march across Europe’s financial capitals with a listing on the London Stock Exchange.
Apparently, the bank is gearing up to list part of its UK operations in London in order to fund the purchase of 318 RBS branches. While Europe’s largest bank might appear a reasonably safe candidate for flotation, its management has so far kept schtum about the listing – indicating confidence about its prospects might not be that high.
According to The Financial Times, the bank formerly known as Abbey (in the UK, at least) is planning to raise up to £3bn by listing 20% of its UK operations on the LSE as early as this autumn. The money would then fund the estimated £1.5bn deal with RBS, set to close in 2011.
Having acquired the likes of Alliance & Leicester and parts of Bradford & Bingley, not to mention countless banks across Europe and South America, the company has expanded rapidly, making a profit of almost €9bn last year. And having reported a profit growth of 15% in the first quarter of the year, the UK arm is one of Santander’s strongest-performing divisions.
Last year, the bank part-listed its Brazilian subsidiary, raising $7bn in the process, so investors might be keen to see what would happen over here. And because of the deposits it acquired from Bradford & Bingley, the UK arm is considerably more efficient than its rivals, with a far lower reliance on the wholesale markets for funding – which would make it a particularly strong temptation to UK investors.
But there’s no doubt markets are still shaky. While the bank might represent one of Spain’s biggest success stories when it comes to growth, last year, it fared no better than many of Spain’s other, far less successful cajas. Its stock fell by 15% and underperformed the European average by more than 10%.
And let’s not forget the plight of Ocado, which made its stock market debut on Wednesday, having been forced to cut its share price just hours before in the face of harsh criticism over its £1bn price tag. That said, though, we’d imagine even with those performance figures, Santander would look significantly more attractive to investors than Ocado, which has yet to make a profit.
If the flotation does take place, the bank will have another £1.5bn to continue on its rampage through the remains of Europe’s shattered banks. Listen carefully, and you’ll hear echoes of the words ‘too big to fail’ echoing through those newly acquired branches…
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