Santander prepares for £3bn London shares listing

11 April 2012

Spanish bank Santander is preparing to float shares in its British operations on the London market this autumn in a deal that could raise an estimated £3 billion.

The group is thought to want to float 20% of Santander UK, the subsidiary formed by the roll-up of its recent acquisitions such as Abbey, Alliance & Leicester and parts of Bradford & Bingley, the Financial Times reported.

Last month, the group made a bid for 318 British branches being sold by Royal Bank of Scotland and had conversations on merging its American operations with US bank M&T.

Britain is one of Santander's strongest divisions, having increased its share of mortgages and savings accounts in the past year and reported profits growth of 15% in the first quarter.

But analysts warned that a flotation in the volatile market conditions was unlikely to be straightforward.

Investors may also be deterred by the uncertain regulatory environment as banks face new capital and liquidity rules and are also subject to competition inquiries.

An alternative way to fund the RBS branch acquisition - which may cost up to £1.8 billion - could be through group-level retained profits.

By the end of 2011, when the RBS deal is scheduled to be completed, Santander could have accumulated more than 10 billion (£8.4 billion) of retained profits.

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