Spanish bank Banco Santander S.A. (STD) is considering initial public offerings for its U.K. and U.S. operations, following the successful floatation of its Brazilian subsidiary last year, according to media reports on Sunday. The move could provide Santander access to fresh funding if the bank goes ahead with its attempt to buy a network of more than 300 branches being sold by Royal Bank of Scotland Group plc (RBS, RBS.L).
Santander is reportedly considering a partial flotation of its U.K. business in 2010, and its U.S. subsidiary Sovereign Bancorp Inc. in 2011 or 2012. Like other international banks buffeted by the global economic crisis, Santander is exploring ways to realize capital gains on its international holdings and increase its capital strength. It would also compensate for the weakness of the bank's Spanish market.
Santander has reportedly been in talks with investment banks that are keen to help fund the bank's planned further expansion in the U.K. As many as five banks are said to have pitched fund-raising ideas, including a stock market listing, to Santander in recent weeks.
The idea, under which about 25% of Santander's British assets would be listed, was well received by institutional investors, although Santander has yet to appoint an investment banking adviser, reports said.
The move to float Santander's U.K. business on the London stock exchange, which could value the operation at GBP 15 billion, would also help fund its attempt to buy a network of more than 300 branches being sold by Royal Bank of Scotland Group.
Santander is among the frontrunners to buy the 318-strong branch network Royal Bank of Scotland has to sell as a condition of the state aid the latter has received. This will include a portion of RBS's small business customers and a smaller number of retail customers
Santander's U.K. businesses include Abbey, Alliance & Leicester and Bradford & Bingley's deposit accounts. It accounted for about half of the new mortgages sold in U.K last year. The plan to float the business could mark a return to the stock market for the three British banks acquired by Santander - Abbey, Alliance & Leicester, and the savings arm of Bradford & Bingley.
Santander is keen to raise funds to expand in the U.K., which it has identified along with Brazil as a core growth market. In early October, Banco Santander's Brazilian unit, Banco Santander (Brasil) SA priced the shares of its initial public offering within the expected range at 23.5 reais each. In what is so far Brazil's biggest IPO, the bank sold 600 million units to raise 14.1 billion reais, or about $8.05 billion.
STD closed Friday's regular trading session at $12.74, up $0.09 or 0.71% on a volume of 10.50 million shares.
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