A&L retail investors look to Abbey as Santander bids
LONDON (Reuters) - Private investors in Alliance & Leicester unnerved by the bank’s takeover by Spain’s Banco Santander can take some comfort from Santander’s purchase of UK lender Abbey four years ago.
Santander (SAN.MC: Quote, Profile, Research) shares have performed creditably since the Abbey deal completed, analysts said, and the Spanish bank — Europe’s second-biggest after HSBC (HSBA.L: Quote, Profile, Research) — has also won approval for its treatment of small shareholders.
”We have had some contact with Santander and one of the things they’ve been keen to do is to communicate with UK shareholders. I think they’ve been doing a good job in that regard,” said Roger Lawson of the UK Shareholders’ Association, a private investors’ lobby group.
”They seem to spend more time informing their small shareholders than many UK companies.”
Santander currently has 1.2 million private UK investors on its shareholder register, mostly Abbey customers who received free shares in the former mutual when it listed on the stock market in 1989.
About 400,000 former Abbey shareholders sold their Santander holdings after the cash-and-shares deal completed in Nov 2004. Many took advantage of a free dealing service set up by Santander in order to address the reluctance of some small investors to hold Spanish stock.
In a further effort to soothe these concerns, Santander acquired a secondary stock market listing in London in July 2005.
Santander’s 1.3 billion pound all-share offer for A&L (ALLL.L: Quote, Profile, Research), recommended by the British bank on Monday, looks set to expand this small shareholder base further.
The UK bank currently has a total of about 504,000 retail shareholders holding about 38 per cent of its equity, A&L said. The majority are private investors who were handed free shares in A&L when it demutualised in 1997.
Analysts add that Santander’s shares have outperformed those of the major UK banks in the past year, helped by its limited exposure to the sub-prime crisis, and by its strong presence in fast-growing emerging markets in Latin America.
”When a bank accounts for 10 per cent of the Latin American banking system, it is driven by very different economic metrics than a domestic UK lender,” said Magnus Mathewson at stockbroker Hichens, Harrison.
Small A&L investors should “take the Santander shares and keep them. It’s a very, very good bank,” Mathewson added.
Santander has escaped the worst of the sub-prime crisis in part due to Spain’s stricter regulatory constraints on banks’ investments in debt-backed securities.
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