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Santander rejected a bid worth around £11 billion earlier this year against British retail banks after Spanish lenders said the offer was too small.
The state-sponsored UK lender approach advised by Morgan Stanley and UBS is no longer alive, according to those familiar with the issue.
Santander raised 7 billion euros this week from a massive sale of the Polish Units, making it less likely to think about selling the UK units. Spanish lenders said they would redeploy some of the proceeds from the sale of interests to accelerate their strategic pivot from Europe to the US to invest in other regions.
Natwest’s approach should have led to the biggest UK banking transaction since the financial crisis, but when the UK government sells the last of its £46 billion crisis-era stocks expected in the coming weeks, it will equip UK lenders to expand more aggressively in the domestic market.
Bank CEO Paul Thwaite has previously said it was on the “front paw” when it comes to acquisitions. He states that any purchase “must be persuasive from a shareholder’s perspective.”
According to people familiar with bidding, Natwest has made an offer to Santander UK that exceeded £10 billion but under £12 billion.
Santander’s UK subsidiary, which includes both retail and commercial banks, had a total shares of £10.4 billion at the end of last year, according to the group’s accounts.
The polishing unit, meanwhile, was 2.2 times the tangible book value of its business, which was significantly higher than the overall group rating.
The bank previously rejected the offer of a “low ball” for a unit with a UK ring fence from Barclays last year, the Financial Times reported previously.
The Spanish group, which recently became the most valuable bank in continental Europe, is cutting back some European countries and freeing up resources to expand in the US on a drive led by executive chair Anabotin. This includes pushes in the US and has launched an aggressive expansion of businesses and investment banks.
“We want to be a relevant bank in the US,” said Jose Garcia Cantera, Santander’s chief financial officer, last month.
Meanwhile, the bank has reduced its UK staffing and has announced more than 2,000 job cuts since last October as part of its plans to cut costs and closed branches. The UK employs approximately 18,000 staff and has 14 million customers.
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The group was unhappy with its high cost base for UK units and its weak returns compared to some of the lenders’ other markets. The Bank of Spain has looked into many options for UK businesses, including withdrawing the market altogether.
One bank-savvy said that in light of the implementation of Polish share sales, potential suitors need to return with a “big offer that means it” in order for Santander to offload the banks of the UK ringfence.
Santander said:
Natwest declined to comment.
Additional Reports by Ivan Levingston of London
