The Spanish owner of Abbey National was today said to have ruled out a bid for Alliance & Leicester as it looked to make a further raid on the UK banking sector.
Santander is ready to return to the acquisition trail less than two years after buying Abbey National and is keen on UK lenders, according to the Financial Times.
The report said that Santander has looked at Alliance but is understood to have discarded the idea of making an approach.
Shares in Alliance – which has also been linked with £5.8bn (€8.3bn) bid from France’s biggest bank Credit Agricole – have soared 53% since October to an all-time high of 1248p as speculation over a possible takeover mounted.
But its value dipped 8% last week as bid rumours cooled and the share price fell a further 1% today.
Alliance chief executive Richard Pym is said to value the bank at 1500p a share or £6.7bn (€9.6bn).
Alliance is seen as one of the UK banking sector’s most likely bid targets and Santander was thought to be a potential suitor as it looked for a bolt-on acquisition to complement Abbey, which it bought for £9.5bn (€13.7bn) in November 2004.
A deal for Alliance would give Santander around one-fifth of Britain’s new mortgage lending market and rival the dominance of Halifax owner HBOS.
It could also provide a windfall for more than half a million Alliance customers who still hold the free shares they received at the time of the group’s demutualisation in 1997.
The interest in Alliance comes amid growing speculation about consolidation of the banking sector across Europe.
Santander chairman Emilio Botin is thought to want to strengthen the bank’s reach across Europe and the United States. His aim is to create a global retail bank to rival HSBC, the world’s third largest bank.