Spanish bank Santander is considering a plan to list its UK operations on the London stock market this autumn in a move that could raise as much as £3bn (€3.6bn) to fund growth, it was reported today.
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 said.
Santander is on the verge of buying a portfolio of 318 branches from Royal Bank of Scotland and is likely to need the money to fund that deal.
The UK is one of the Spanish bank’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 of the year.
However, analysts warned that a flotation in the current 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 numerous competition inquiries.
The Financial Times said the main alternative way to fund the RBS branch acquisition – which may cost up to £1.8 billion – would 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 €10bn of retained profits, the report added.