Santander approach to A&L could commence period of consolidation
by Gill Montia
Alliance & Leicester (A&L) is reported to have been in takeover talks with Grupo Santander, the owner of Abbey.
Although discussions are not currently taking place, a further approach from the Spanish banking group is a possibility.
Until recently, Santander had let it be known that it had no UK acquisitions planned and would focus on organic growth and expanding its presence in Latin America.
However, A&L’s shares have fallen 43% in the wake of the credit crisis and this may well have influenced Santander’s stance.
The acquisition of A&L could also progress the Spanish bank’s plans to have 300 additional Abbey branches in the UK by 2012.
Such a move would highlight the vulnerability of the UK banking sector to foreign takeovers, particularly as the smaller mortgage banks could be face funding issues during 2008.
Some analysts are predicting a period of consolidation in the sector and if so, Bradford & Bingley is another likely takeover target, its value having dropped 43% during 2007.
London Scottish Bank (LSB), the personal loan bank, could also be of interest to a potential buyer, its shares having fallen by 45% in the past 12 months.
LSB is currently in the news for becoming the first London-listed bank to be ordered by the FSA to increase its reserves, following the introduction of new capital requirement regulations.
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