Santander's European Ambitions: A Potential Stake in the Royal Bank of Scotland's NatWest Bid

Strategic Insights -

The merger of Banco Santander and Banco Central Hispano, resulting in Banco Santander Central Hispano (BSCH), has led to speculation about the bank's desire to expand its presence in Europe. With its market value roughly double that of the Royal Bank of Scotland, BSCH is believed to be keen to join its UK partner in a takeover bid for NatWest, with sources indicating that the Royal Bank is viewing the decision purely on commercial terms. This could potentially result in BSCH taking a substantial stake in the enlarged Royal Bank/NatWest, injecting capital, and increasing the bank's capacity to make a higher offer and offer a significant proportion in cash.

Key Takeaways:

  • Banco Santander Central Hispano (BSCH) is believed to be keen to join the Royal Bank of Scotland in a takeover bid for NatWest, potentially resulting in a significant stake in the enlarged Royal Bank/NatWest.
  • BSCH's market value is roughly double that of the Royal Bank of Scotland's $12.5 billion, with shares more highly rated than those of the Royal.
  • The Royal Bank of Scotland's chairman, Lord Younger, sits on BSCH's board, with Santander chairman Emilio Botin and colleague Juan Inciarte sitting on the Royal Bank's board.
  • BSCH has a substantial presence in Latin America, accounting for 50% of group assets, and holds significant stakes in European banks, including Societe Generale and Istituto San Paolo di Torino.
  • The Royal Bank of Scotland is thought to view the decision to bid for NatWest in purely commercial terms, with no consideration for Edinburgh's financial community views on the matter.
  • BSCH's expansion plans in Europe, following the merger of Banco Santander and Banco Central Hispano, demonstrate the bank's commitment to size and efficient competition in the European market.

Statistics:

  • BSCH has a market value of roughly $25 billion, double that of the Royal Bank of Scotland's $12.5 billion.
  • BSCH shares are more highly rated than those of the Royal Bank.
  • BSCH has a significant presence in Latin America, accounting for 50% of group assets.
  • BSCH holds a 5% stake in Societe Generale, a 7% stake in Istituto San Paolo di Torino, and a 100% stake in the C-C Bank.
  • The Royal Bank of Scotland has a 3% stake in BSCH.

Sources:

  • "Banking on expansion" by ANDREW TURPIN in City Correspondent