Santander calls off 2 b euro deal to buy RBS branches
Spanish lender Santander on Friday pulled out of a 1.65 billion
($2.65 billion, 2.05 billion euro) deal to buy 316 branches from Royal
Bank of Scotland, in a blow to the state-rescued British bank.
Santander said it was withdrawing because it did not believe the
banks could meet a deadline of February 2013, extended from the end of
2011, to complete the sale ordered by the European Commission in 2010
after RBS’s state bailout.
“It is now apparent that this revised target will not be achieved,” a
Santander statement said.
“Santander ... is not willing to agree a further extension to that
deadline. In that case, the agreement will automatically terminate in
accordance with its terms and the transfer of the business to Santander
UK will not take place.” Chief executive Ana Botin added that she did
not believe the business could be tranferred in a “steady state” within
a “reasonable timeframe”.
The collapse of the deal, which was to include RBS-branded branches
in England and Wales plus NatWest branches in Scotland, leaves troubled
RBS searching for a new buyer and millions of customers uncertain of
their accounts’ future.
RBS said that 1.8 million retail customers were involved, while media
reports said the deal included accounts of hundreds of thousands of
small and medium-sized businesses. The price could have been adjusted on
completion.
The bank was required to reduce its branch network as part of
European Commission penalties after it received a 45.5-billion bailout
amid the financial crisis. It faces a deadline of the end of 2013 to
complete a sale.
RBS said it would “continue to work to fulfil its obligations to the
European Commission”, while chief executive Stephen Hester called the
deal’s collapse “disappointing, especially for the customers and staff
involved”.
“Much of the heavy lifting associated with a transfer has already
been completed, including separating data for 1.8 million customers and
putting in place a standalone management team,” he added in a statement.
“RBS’s strong progress in our restructuring plans means we can
continue to provide a stable home for this business and its customers
pending a further resolution.” The bank, which remains 81-percent owned
by the British taxpayer, is also awaiting news of its fine for
manipulation of the Libor interest rate after fellow lender Barclays was
fined $450 million in the rate-rigging scandal.
RBS admitted in July it was implicated in manipulation of rates
crucial to the operation of short-term financing and global markets, the
subject of an international investigation.
The collapse of the Santander deal came a day after RBS lauched a
partial flotation of its insurance subsidiary Direct Line Group on the
London stock market ahead of a full sale of the unit by the end of 2014.
RBS raised at least 787 million ($1.261 billion, 978 million euros)
from the sale of around a third of Direct Line in an initial public
offering (IPO).
The sale of Direct Line, which specialises in motor and home
insurance, was also ordered by the European Commission following RBS’s
bailout. |