Santander woos IFAs in Abbey takeover bid

Santander Central Hispano (SCH), the Spanish bank bidding for Abbey National, extended its charm offensive to the UK intermediary market yesterday, writing letters to hundreds of key independent financial advisers to reassure them of its commitment to the IFA market should it be successful with its acquisition.

Santander Central Hispano (SCH), the Spanish bank bidding for Abbey National, extended its charm offensive to the UK intermediary market yesterday, writing letters to hundreds of key independent financial advisers to reassure them of its commitment to the IFA market should it be successful with its acquisition.

Reiterating its intention to complete the deal by November, SCH said it had written the letter to "explain why Abbey's relationships with intermediaries are important to us".

The letter said with around 50 per cent of mortgages being sold through intermediaries in the UK, it saw IFAs at the heart of Abbey's potential growth in the market. Abbey would not confirm exactly what proportion of its mortgage business is written through intermediaries, but said that it was more than half.

"Our aim is to drive forward business in all our channels, maximising business through Abbey's existing brand in the intermediary market, Abbey for Intermediaries, and increasing branch-based business volumes," the letter said.

SCH is expected to receive clearance for its bid from the European competition authorities next Friday.

HBOS, Abbey's biggest rival, is then expected to lay down its own bid for Abbey within days, sparking a certain inquiry by UK competition authorities. However, it is believed there are differences at HBOS board level, with some directors concerned that the concessions which it could be forced to make to come into line with UK competition rules would wipe out most of the synergies which it may stand to benefit from.

Earlier this week, SCH began selling its shareholding in Royal Bank of Scotland, the UK's second largest retail banking group, with which it has had a relationship for almost 16 years. The sale of almost half of its 5.5 per cent stake in RBS raised some £1.2bn for SCH, which it may use to sweeten its offer if a bidding war takes place.

The Spanish bank also agreed that its chairman and head of European operations would both step down from the RBS board should its bid be successful. RBS chairman Sir George Mathewson would also step down from the SCH board.