Santander set to expand network with 318 RBS branches

June 14, 2010 by Brendan O'Neill

News

Santander, which also bought Abbey National, Bradford & Bingley and Alliance & Leicester, looks as though it may close a deal this week that sees it take over 318 Royal Bank of Scotland (RBS) high street branches.

The Spanish bank is now the only bidder remaining in the sales process that closes on Tuesday 15th June. RBS is obliged to dispense with the 318 branches as instructed by the European Union as a result of the multi-million pound bailout it accepted from the UK government during the credit crunch. It surprised many when it announced anticipated record losses last year of around £28 billion.

Santander is already the largest bank in the Eurozone and in April, it submitted an offer of around £2 billion for the branches. It controls 14 percent of the UK’s mortgage market and 10 percent of overall high street branches and retail savings. If the purchase goes through, then it will also have a 9 percent share in the UK’s SME market as well, compared to its current 3 percent share. Compared with many other Spanish banks, Santander survived by selling some of its property portfolio early in 2007 as the market began to crack. The firm anticipated double digit growth in the UK following the recession.

RBS is currently 84 percent owned by the taxpayer and must sell the 318 branches by 2013 and can decline an offer below the asking price. The government is planning a ‘scaled exit’ from its RBS ownership.