Abbey Acquisition By Banco Santander Essay

2236 words - 9 pages

M&A in the Financial Services

2005

Outline

Abstract
Introduction
Body
1 Reasons for acquisition
2 Benefits for both parties
3 Royal Bank of Scotland
4 Shares
5 Cooperation between Santander and RBS
6 Potential growth benefit
7 Santander and Abbey before acquisition
8 Some problems remaining
Conclusion
References

Abstract

The shareholders also have benefit from the acquisition: Abbey's shareholders have the opportunity to own a significant part of the Banco Santander. Under the terms of acquisition, Abbey shareholders receive one new Banco Santander share for every one Abbey share. The effective acquisition will result is existing shareholders of Banco Santander owning 76.4 percent of the issued shares of Banco Santander, and the corresponding 23.6 percent will be owned by the Abbey shareholders.

Introduction

Mergers and acquisitions in financial services business area are very common and result in consolidation of the business unit. Acquisition is beneficial for all sides involved and Santander's acquisition of Abbey National of the UK is an evidence of this. Abbey has a major position in the United Kingdom mortgage market. Its strong distribution network represents for Banco Santander and Abbey shareholders a valuable opportunity: application of Banco Santander's commercial and technological practices to Abbey's banking operations.

Conclusion

It is hard to judge how successful the acquisition of Abbey by Banco Santander was because only less than 5 months have passed. The position on the market of both companies became more stable consolidated; however, the management's expectations are subject to uncertainties and changes in circumstances. In February the bank announced the best results in the history of the company: earnings increase 20% to $4 billion. 6,400 employees moved into the bank's $730 million headquarters. Nevertheless, there are still clouds on the horizon. The profit indicators for 2004 do not include Abbey which lost money in 2003 and is not fully integrated into company yet.

Mergers and acquisitions in financial services business area are very common and result in consolidation of the business unit. Acquisition is beneficial for all sides involved and Santander's acquisition of Abbey National of the UK is an evidence of this. Abbey has a major position in the United Kingdom mortgage market. Its strong distribution network represents for Banco Santander and Abbey shareholders a valuable opportunity: application of Banco Santander's commercial and technological practices to Abbey's banking operations.

Banco Santander is a Spanish bank with an international presence which was established in 1857. Today it is one of the largest banks in the world with approximately 41 million customers and it is present in the more than 10 countries. In addition, according to the statistics at 31 December 2003, the Banco Santander Group was the second largest banking...

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