Santander will study the acquisition of RBS small and medium sized business unit if it is confirmed that RBS puts it up for sale, as we reported in a recent post. RBS have to sell off some of their businesses to comply with Brussels. RBS was bailed out at the height of the global financial crisis, to sell assets in a bid to revive the sector and address EU concerns over state aid.

Santander is the third-biggest bank in Britain, where it bought Alliance & Leicester in October 2008, one month after it acquired the deposits and distribution channels of Bradford & Bingley and four years after purchasing Abbey National.

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The Spanish owned Bank, Abbey (LON:ANLA) raised its tracker Mortgage rates yesterday, pushing its two-year tracker mortgage product up by 0.25 percent, this comes despite the interest rate cut and the Libor rate falling.

The new Abbey tracker rate will be set at 2.24 percent over base interest rate currently at 2 percent. Previously the tracker was at 1.99 percent over base. However with the interest rate being cut if you took out this tracker you would pay 4.24 percent interest on your loan.

Abbey owned by Santander have also hiked up the lenders fee on the product from £995 to £1,495 you will also need a 25 percent deposit.

This hike comes despite the Libor rate falling 50 basic points last week, the Libor is the interest rate used for banks to lend to each other in the wholesale market to fund the tracker mortgages.

Source: Timesonline Breaking and Entering video

Abbey (LON:ANLA) the Spanish owned bank have said they will pass Bank of England Interest rate cut of 1 percent to all its customers an its variable rate mortgages that track the base rate, this will include all flexible deals, the changes will take place from January 1.

However, Abbey is withdrawing all its tracker products tonight, so the only reductions will apply to existing Abbey Mortgage holders.

Abbey’s Standard Variable Rate (SVR), current stands at 5.44 percent which is currently under review and the bank will inform customers very soon of their decision.

The trackers are being withdrawn to stop excessive in-flows as well as impacting the service levels, although Abbey will launch a new range of mortgages next week.

Source: FTAdviser The Abyss on dvd Blast! video

Santander the Spanish bank who owns Abbey, Bradford & Bingley’s saving business and Alliance & Leicester is now under immense pressure to raise capital to stay ahead of its European competition who took the Government bailout.

Santander turned down the Governments cash hand out, and decided to move £1 billion from another part of its company to its UK business which boosted the tier-one ratio for Abbey and A&L to around 9.25 percent.

However, Santander’s group tier-one ratio does not look that good now at a much weaker 7.89 percent and its core tier one ratio at a low 6.31 percent, considering the average European major bank average being over 9 percent for core capital, according to analysts at Merrill Lynch.

But with the Spanish property market falling and the country heading for a recession it raises concerns if it can withstand the pressure from both continents within this global financial crisis.

Source: Independant

Spanish owned Abbey National have continued in the third-quarter to bite large chunks of new mortgage lending, due to the weaker rivals leaving the mortgage loans market.

Abbey is owned by Santander – Spain’s largest bank, who have recently acquired Bradford & Bingley saving business and Alliance & Leicester. The bank has seen a profit jump of 20 percent taking it to £737 million in the first nine months of 2008, the same period last year saw profits at £613 million.

The strong inflow of retail deposits and mortgage lending expansion helped boost Santander’s profits.
Abbey in the second quarter of this year took 42 percent of the new mortgage lending, and in the third quarter took 28 percent. Net mortgage lending which in the second quarter was £5.4 billion fell sharply to £2.5 billion in the third quarter of this year.

Abbeys repossession and arrears rates are below the industry average the UK lender have said that they have noticed the housing slump is increasing the arrears and repossessions. In the second quarter of 2008 Abbey repossessed 589 properties compared the third quarter of 2008 where the figure rose to 802 repossessions by Abbey.

Source: Propertyweek

Abbey who are owned by Spanish Bank Santander lent £10.8 billion more than recovered in repayments, this accounts for 28 percent of all extra mortgage lending this year.

Santander who recently acquired Alliance & Leicester and Bradford and Bingley’s £20 billion saving book lent £7.5 billion in the quarter, making this year’s lending to £27 billion so far.

Homeowners and small businesses are a major concern for the British government as they push for banks to start lending to each other again, in a bid to keep the credit flowing, they did this by backing them with a £500 billion bailout plan.

Although, Abbey’s financial report shows that banks have dropped their net new lending considerably so far this year, providing less than £40 billion compared to £108 billion last year.

Source: Telegraph

Santander owner of Abbey reported a surge of 4.4 percent in its third-quarter net profits to 2.21 billion Euros from 2.11 billion a year previous. The profit boost came as the Spain’s largest bank focused on the takeover of Brazil’s Banco Real from ABN Amro and retail banking.

Spain’s Santander recently acquired the UK’s Alliance & Leicester as well as the deposits and branches of Bradford & Bingley that was nationalized earlier this year. Santander has also agreed to buy the US bank Sovereign Bancorp. It’s now said that the Abbey owner will concentrate on rebuilding its core capital to compete with US and European banks that have been recapitalized by their governments.

The core capital of Santander was at 6.31 percent at the end of September, although the banks executives recognized that due to the recent 5 billion Euro purchases that this would drop below 6 percent. The bank also added that they wanted to boost the ratio up by 7 percent or more by the end of 2009.

At 0915 GMT today (October 28) shares in Santander rose 0.1 percent to 6.98 euro’s although in earlier trade they shot up 8 percent.

Source: FT

A&L investor has been hanging around for some time in the hope of their bank being taken over. However; many are now sad as Alliance & Leicester will no longer be a UK bank.

It is sad to see that a Spanish bank will now be the owners of A&L, it would have been nice for a UK company to purchase the bank, but they were in such a weak position that they did not have a strong negotiating position, which is why they buckled so quickly from the Santander offer.

According to the Financial Times harry potter and the sorcerer s stone divx Santander will come out better from the offer; they have offered A&L a 9 per cent premium on their average share price over the past four weeks. The deal should offer Santander a 19 per cent return on investment.

It would have been a nice thought for A&L to be bought out by a UK bank, but bids were a bit thin on the ground, so surely it is better to agree to a deal with Santander than no deal at all?

Santander plan to merge Alliance & Leicester with Abbey, who they bought back in 2004. Santander has said that this new deal would result in £180million-a-year savings by combining back office work.

David Bennett, A&L’s chief executive has not done much to comfort worried workers, he has said “I can’t say to you today that there won’t be job losses but this deal is not predicated on job losses.”

The Mirror has said that the new takeover deal is expected to hit A&L workers most; the bank currently employs 8,000 staff. Union leaders have committed on this new deal saying that the deal was a grave threat to jobs; they also added that they will fight any redundancies.

I do understand that the union will do all they can to save these jobs, but they have to realize these are bad times for the economy and job loses are to be expected. The deal with Santander was vital for A&L, if the deal did not go ahead, then there could have been many more job loses on the cards.

A&L who have 5.5 million customers realise that the credit crisis is going to get a lot worse, so this deal was vital to them to help secure their business. Chief executive David Bennett has said that “There is considerable uncertainty and the outlook is likely to continue to remain turbulent.”

The former building society insists that they have no black holes and was under no pressure to sell their bank to raise extra equity. However one thing is certain, if they decided to do nothing then it would not have been long before they would have been forced to sell.

According to This is Money , A&L currently has £23bn of customer deposits and savings however; the bank has loaned out £43bn in mortgages, so some quick cash was needed. Since the news of the Santander deal, A&L shares jumped 115¾p to 335p.

We know that Santander are offering just £1.3bn for Alliance & Leicester, this is just a drop in the ocean for the Spanish bank. However; Santander will now have to put its weight behind A&L’s mortgage books.

So one question remains, who will Santander try to buyout next.