Abbey chief sees way clear for bid

13 April 2012

THE agreed takeover bid by Spain's Santander Central Hispano for mortgage lender Abbey National is likely to be approved by shareholders, and will not face problems from the competition authorities, Abbey's chief executive said in a newspaper interview published on Wednesday.

'I don't see any particular problems between this moment and the vote, although the road will not be free of obstacles,' Luqman Arnold told El Pais when asked whether the required 75% of Abbey shareholders would back SCH's offer of around £8bn ($14.57bn).

'The important thing is that Santander's offer is reliable and will not cause problems with the competition authorities, as might happen to someone else,' Arnold added.

Agreed takeover bids often have a strong chance of success in Spain because board members tend to hold large chunks of their companies' share capital. In contrast, Abbey says directors hold only 0.03% of its stock.

Abbey shares have been boosted in recent days after HBOS said it was considering a counter-bid for its British rival, although it has cautioned that no decision has been made as yet.

Arnold added that retail shareholders, which own about 30% of Abbey, were being treated well by the Spanish bank and were getting to know it, which would also be important for the success of the bid. SCH, a powerhouse in Spain and Latin America, was barely known in the UK until two weeks ago.

Arnold said cuts in staff at Abbey were 'not necessarily' part of SCH's plan for the British bank, although analysts say the targets set by the Spanish bank seem likely to include restructuring. SCH has not commented on possible staff cuts.

Meanwhile, Abbey National also confirmed today it is in advanced talks to sell a business that provides mortgages to Britons looking to set up home in France. The group is discussing the potential sale of Abbey National France with financial services group BNP Paribas.

The Abbey operation, which has around 26,000 customers and assets worth 2.1bn euros (£1.39bn), draws around a quarter of its business from Britons looking to purchase residential properties in France.

However, Abbey has been looking to sell the subsidiary as part of its drive to create a company solely focused on UK personal financial services.

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