Santander delays business flotation until 2011

Spain-based financial provider Santander, who offers both personal and business bank accounts, has decided to delay floating its £20 billion UK business until the second half of next year.

The delay, which sources say may last until the November of the following year, follows on the heels of banking rival Lloyds snapping up several of Santander UK’s high-level management staff.  Lloyds is currently partly nationalised thanks to a 41 per cent interest owned by the government.

The postponement is meant to give the new chief executive of Santander UK, Ana Patricia Botín, chance to settle in and to help generate a solid network within the UK investment banking marketplace.

Santander’s delay is partly due to economic woes in its native Spain, thanks to concerns that the country may need to rely on a EU bailout much as Ireland has.

The bank’s British division was dealt a further blow recently when news circulated that António Horta-Osório, its former chief executive, was leaving Santander for a role at Lloyds – and taking two high-level management personnel with him.

British investors recently stated that the Spanish bank should cut the value of its UK subsidiary down to the approximate vicinity of £15 billion since the relative value of the banking group has declined with the departure of so many top executives.

Horta-Osorio also made a recent disclosure that he will be accompanied by many high-level executives when he steps into the chief executive position for Lloyds in the coming year.

London shareholders were less than enthused with the news, stating that the difficulty of pulling off a British float of Santander was increasing exponentially.

One senior fund manager remarked that any float would be a hard sell since  Botín is a relative unknown to the UK investment community.

After it took over Alliance & Leicester, Bradford & Bingley, and Abbey National, Santander has an approximate 20 per cent market share in the mortgage industry in the UK. In a plan that was to recuperate some of the costs of its purchase of  318 branches from the Royal Bank of Scotland, it had been hoping to sell one-fifth of its UK operation and raise about £3 billion in funds.

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