Santander Interested in £2bn Acquisition of Clydesdale and Yorkshire Banks

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By Industry Leaders Magazine | January 29, 2013 1:53 PM EST

Industry Leaders Magazine

Santander UK is speculated to be eyeballing a £2 billion acquisition of Clydesdale and Yorkshire banks as it wants to bolster and expand its presence in the Great Britain. Speculation on the possible takeover has been welcomed by investors of National Australia Bank as Clydesdale and Yorkshire banks have been a pain in the neck since the beginning of the global financial crisis. The acquisition by Spanish banking giant would mean that National Australia Bank would finally get rid of the loss-making UK division.

Santander eyeballs Clydesdale and Yorkshire takeover

Santander UK, the division of the Spanish financial group, is said to be interested in the approximately £2 billion acquisition of Clydesdale and Yorkshire banks since its plans of the takeover of Royal Bank of Scotland's 316 branches went up the spout. According to sources familiar with the matter, Santander, the UK's fifth-biggest bank, is eyeing the bid for the banks owned by National Bank of Australia but it has not made any official bid yet.

The possible acquisition of Clydesdale and Yorkshire would be aimed at accelerating and boosting the Santander's presence in the UK as the two banks mainly serve Scotland and northern England. As of yet, Santander UK has as many as 25 million clients. All latest steps of Santander UK were aimed at getting a foothold in the British banking business and expanding its presence. The takeover of Clydesdale and Yorkshire would certainly strengthen Santander's reputation and standing in small business banking as the two banks have a strong position in small to medium enterprise lending. Santander is greatly interested in expanding in the area.

Analysts estimate the possible acquisition of Clydesdale and Yorkshire banks is worth approximately £2 billion and Santander UK could afford it as it saved as much as £2.7 from the failure of the takeover of a network of 316 branches from Royal Bank of Scotland.

Ana Botin, chief executive officer at Santander UK, did not comment on rumors about the acquisition of National Australia Bank's Clydesdale and Yorkshire, yet she underlined that the bank was on expansion track.

NBA to get rid of trouble

Without a doubt, National Australia Bank is keen on getting rid of Clydesdale and Yorkshire as it has been facing its investors demands to cut out the dead wood. The Australian bank has seen its UK division struggle since the outbreak of the financial global crisis. The underperformance of Clydesdale and Yorkshire banks, which however record strong results in the small to medium enterprises and corporate lending, affected the return on capital and share price as well.

Therefore investors of National Australia Bank have welcomed the rumors about the possible acquisition of Clydesdale and Yorkshire banks by Santander UK as the two banks made a surprising £139 million loss for the fiscal year to September. The takeover is expected to boost share prices of National Australia Bank. The Australian bank had planned to sell its UK loss-making and troublesome yet it struggled to find a buyer. After the failure of its search for a buyer it decided to terminate about 1,400 jobs to reduce costs.

Industry Leaders Magazine

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