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Santander only bidder for RBS bank branches - source

LONDON (Reuters) - Spain’s Santander was the only bidder for a network of 318 UK branches being sold by Royal Bank of Scotland, a person familiar with the matter said, in a deal likely to be worth about 1.8 billion pounds.

A woman uses an ATM at a Royal Bank of Scotland (RBS) branch in the City of London February 25, 2010. REUTERS/Toby Melville

RBS, 83 percent state-owned after it was bailed out in the financial crisis, is selling off the branches under the revived Williams & Glyn brand. RBS is being forced to sell several assets as a consequence of taking state aid.

The deadline for bids was on Monday.

Santander, the euro zone’s biggest bank, would get a significant boost to the size of its business in Britain if it seals a deal, adding 1.8 million retail customers and most importantly 5 percent of the UK small and medium size (SME) business market it has targeted for growth.

It would also show Santander continuing to expand abroad despite problems at home.

The bursting of a decade-long housing bubble in Spain and a debt crisis in Greece has sparked fears that Spain’s recession will deepen and banks face massive losses and low growth. Investors have been rattled, and the head of rival bank BBVA said international capital markets were closed for most Spanish banks and companies.

Santander’s shares have fallen 22 percent this year, underperforming an 8 percent fall by the European bank sector, but its chairman, Emilio Botin, has not lost his appetite for deals.

The bank last week said 2010 earnings should be similar to 2009’s strong performance and unveiled a $2.5 billion buyout of its Mexican division. It is also expected to attempt to build up its U.S. bank Sovereign, targeting the northeast.

MARKET SHARE GAINS

Santander had long been seen as the front runner to win the RBS auction as it could pay a higher price than rivals due to the cost savings promised by folding the business into its existing UK business. It bought lender Abbey in 2004 and has since added Alliance & Leicester and Bradford & Bingley.

The deal will give the Spanish bank about 1,645 branches, or 12 percent of the market.

It will consolidate its position as the second biggest home loan provider, where it had a 13.6 percent market share at the end of 2009, and will add to its 10 percent share of the deposit market and 9 percent share of bank accounts.

Its share of the SME market should rise to near 8 percent, and it will add 1,200 large corporate customers.

Santander was expected to be the sole bidder after National Australia Bank pulled out of the auction last week and interest from BBVA cooled, industry sources said.

Its bid is likely to be between 1.5 billion and 2 billion pounds, sources have told Reuters.

RBS and Santander declined to comment.

($1=.6465 pounds)

Editing by Greg Mahlich

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