Alliance and Leicester Taken Over by Santander
Writes Dan Drage dan.drage@consumerchoices.co.uk
The robustness of high street banks was galvanised yesterday as Santander had its bid for Alliance and Leicester accepted.
The takeover, when finalised, will see Alliance and Leicester (www.alliance-leicester.co.uk) merge with Abbey (www.abbey.com), an existing commodity in the Santander portfolio.
Santander, the Spanish banking group, is currently the second largest bank in Europe in terms of market capitalisation. HSBC (www.hsbc.co.uk) holds the top spot.
The merger will be of relief to the Financial Services Authority (FSA), who have expressed concern over the robustness of banking mechanics and infrastructure since the Northern Rock collapse and recent Bradford and Bingley bailout.
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"The market share as a whole may now be weighted too far in the direction of one or two banking groups"
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At the same time, the watchdog should be wary that the disappearance of Alliance and Leicester as a sole body could leave too much influence in the hands of the big banks.
Alliance and Leicester’s acting Chairman, Roy Brown, said the Santander offer was just too good to refuse as a result of “the significant external risks presented by the deterioration in economic conditions and the continuing turbulence in the financial markets.”
The all share deal is believed to be worth £1.26 billion.
Chris Eagle, Commercial Manager at Credit Choices, believes this represents a steal:
“Santander have done their homework and bought a bank that was valued at three times the amount they’re paying for it just two years ago”
He continues:
“This could prove to be a psychological fillip for consumer confidence, with customers of both banks buoyed by the galvanising effect of the merger, but the market share as a whole may now be weighted too far in the direction of one or two banking groups.”
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