Santander agrees £1.2bn A&L deal

Published 14th Jul 2008

Spanish bank Santander has agreed a deal to buy UK lender Alliance & Leicester (A&L) for about £1.26bn.



Yet, A&L said the current tough economic climate made the deal even more attractive.

"A&L is a strong and attractive business and its resilient performance is proof of the quality of its franchise," said its acting chairman Roy Brown.

"However, the board is acutely aware of the significant external risks presented by the deterioration in economic conditions and the continuing turbulence in the financial markets."

Like other lenders, Alliance has reacted to the credit turmoil by reducing the number of mortgages it sells and pushing up the interest rates.

Union concerns

The proposed deal would boost Santander's presence in the UK, the Spanish bank said.

"We are very pleased to be working with the management and employees of A&L as we seek to build with Abbey one of the leading franchises in the UK banking sector," said its chairman Emilio Botin.

But unions said they were worried about the implications of the deal for jobs at A&L's 700 or so High Street branches.

The Leicester-based business employs about 8,000 staff.

"Staff at A&L deserve to have answers about their future and we urge the company to be upfront about their intentions," said Andy Kerr, deputy general secretary of the Communication Workers Union.

By mid-afternoon, Alliance's shares were up 48% at 324.5 pence.

Shares in other lenders soared on the news, with Bradford and Bingley shares rising by more than 25% at one point.

Source: ' bbc '

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