Abbey owner Santander in Alliance & Leicester takeover bid on 100 Mortgages

Santander, the owners of Abbey has now made a takeover bid for Alliance & Leicester (A&L); the news of a possible takeover has lead to A&L shares increasing by more than 40 percent. According to BBC News, Santander has offered Alliance & Leicester £1.3bn.

As yet A&L have not made an official announcement as to who the buyer is, but BBC News seems to think that it is Abbey owned Santander. The UK firm has said that it was in “advanced” discussions.

The BBC has said that if the takeover deal is true, then it could pose some competition issues. The correspondent said “The takeover – if successful – would be a great relief to the City watchdog, the Financial Services Authority – because it believes big banks are more robust in these uncertain times,”

Alliance & Leicester has said that they have been offered 317 pence per share; however they have said that they are not sure that a deal would be forthcoming. Although A&L has seen a slump in their shares like many other UK banks, they have not had to ask their shareholders for any extra cash.

Just last year A&L had seen their shares fall by 30%, as a result forced the bank to write down the value of mortgage-backed investments by nearly £400m. In the current climate, Alliance & Leicester has had to rescue the number of mortgages that they sell, along with pushing up interest rates.

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