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Santander rejected a bid value about £11bn for its UK retail financial institution from NatWest earlier this yr after the Spanish lender stated the supply was too low.
The strategy by the state-backed British lender, which was being suggested by Morgan Stanley and UBS, is now not stay, in line with individuals aware of the matter.
Santander has since raised €7bn from the sale of a giant stake in its Polish unit this week, making any sale of its UK unit much less possible. The Spanish lender stated it could redeploy a few of the proceeds from the stake sale to put money into its different areas, because it accelerates a strategic pivot away from Europe to the Americas.
NatWest’s strategy — which might have led to the largest UK banking deal for the reason that monetary disaster — comes because the British lender gears as much as broaden aggressively in its home market as soon as the UK authorities sells the final of its £46bn crisis-era stake, which is anticipated within the coming weeks.
Paul Thwaite, the financial institution’s chief govt, beforehand stated that it was on the “entrance foot” when it got here to acquisitions. He has stated that any buy “must be completely compelling from a shareholder perspective”.
NatWest made a suggestion of “greater than £10bn, however lower than £12bn” for Santander UK, in line with individuals aware of the bid.
Santander’s UK subsidiary, which incorporates each retail and industrial banking, had whole fairness of £10.4bn on the finish of final yr, in line with the group’s accounts, a metric that broadly displays the market worth of the enterprise.
In the meantime, the worth agreed for its Polish unit equated to 2.2 instances the tangible e book worth of that enterprise, a significantly larger valuation than that of the general group.
The financial institution additionally beforehand rejected a “low ball” supply for its UK ringfenced unit from Barclays final yr, the Monetary Occasions beforehand reported.
The Spanish group, which not too long ago grew to become essentially the most invaluable financial institution in continental Europe, is slicing again in some European international locations to unencumber assets to broaden within the Americas in a drive led by its govt chair Ana Botín. This has included a push within the US, the place it has launched an aggressive enlargement of its company and funding financial institution.
“We wish to be a related financial institution within the US,” Jose Garcia Cantera, Santander’s chief monetary officer, stated final month.
In the meantime, the financial institution has been decreasing headcount within the UK, saying greater than 2,000 job cuts since final October as a part of plans to chop prices and shut branches. It employs about 18,000 workers within the UK and has 14mn clients.
The group had develop into pissed off with the UK unit’s excessive value base and its weaker returns relative to a few of the lender’s different markets, in addition to Britain’s ringfencing regime, the FT beforehand reported. The Spanish financial institution has explored a lot of choices for its UK enterprise, together with exiting the market altogether.
One particular person aware of the financial institution stated that any potential suitors would now should return with a “massive supply for it to make sense” for Santander to dump its UK ringfenced financial institution, given its execution of the Polish stake sale.
Santander stated: “As we’ve stated, the UK is just not on the market and is a core a part of Santander’s diversified enterprise mannequin.”
NatWest declined to remark.
Further reporting by Ivan Levingston in London
