Santander still seen shopping after A&L buy

By Judith MacInnes

MADRID (Reuters) - Santander's (SAN.MC) shopping habit is unlikely to be broken with British mortgage lender Alliance & Leicester ALLL.L and asset sales could be used to fund more acquisitions, analysts said on Tuesday.

In the last week, media have reported that Europe's second largest bank is planning to sell its asset management and insurance divisions for a total of 6-7 billion euros (4.8-5.6 billion pounds). Santander declined to comment.

While other global banks are selling assets to shore up their balance sheets in the wake of the subprime rout, the possible Santander sales are being seen as raising cash to fund growth.

"If the sales of the asset management and insurance businesses go ahead, Santander will definitely use the money to buy something," said Fox-Pitt, Kelton analyst Jagoba Garcia.

"It really has no capital restrictions nor is it in need of liquidity."

Santander had no direct exposure to subprime mortgages and has a reputation of being one of the world's best managed banks as it has maintained an aggressive but picky acquisitions policy.

With banking valuations falling and Santander in good shape, it was on the shopping trail again last week, agreeing to buy A&L for about 1.3 billion pounds ($2.61 billion) in shares -- about half what it would have cost in late 2007 when talks were reported to have foundered over price.

The question is where Santander will go shopping next.