Santander takeover of TSB is boost to Reeves as she fights to keep City’s trust
Santander’s takeover of TSB will be music to Rachel Reeves’ ears: sparing the under-pressure chancellor the potential embarrassment of having to explain why a major high street lender had given up on Britain.On Tuesday night, Spanish-owned Santander said it would buy TSB from its fellow Spanish owner, Sabadell, for £2.65bn, ending months of speculation over the future of the British bank – and reaffirming Santander’s commitment to the UK.Rumours had emerged in January that Santander UK could pull out of high street banking, potentially reversing gains made in stepping up its British presence with the acquisition of Abbey National two decades earlier.Bosses had started slashing 2,000 jobs months earlier, fuelling speculation that it was trying to create a leaner business that could lure potential suitors.
The chatter prompted panic, feeding into a growing existential crisis over whether allegedly burdensome regulation was driving potential investment and foreign firms away from the City – which was already losing stock market listings and floats to foreign rivals,Publicly, Santander repeated that the UK was a core market, with 14 million customers served through 350 branches and 18,000 staff,But in Madrid, executives led by executive chair Ana Botín, were said to be increasingly frustrated over UK regulations and costs that were dampening profitability,That included post-financial crisis rules such as ring-fencing, which protect and separate consumer deposits from riskier operations including investment banking, but are criticised as costly and complex by banks,Meanwhile, Santander’s frustrations were compounded by the car finance commission scandal, which could lead to a £1.
9bn compensation bill for the bank’s aggrieved borrowers,Reeves and her Labour government, however, appeared alive to the threats,Months earlier, the chancellor had ordered City watchdogs to do more to promote growth and competition, including by watering down financial crisis regulation that she claimed had “gone too far”,By late January, the chancellor was attempting to intervene in a supreme court case over the car finance scandal, concerned it could curb lenders’ activities,Days after her intervention emerged, Reeves met with Botín on the sidelines of the World Economic Forum in Davos, Switzerland.
While in the Swiss Alps, Botín declared: “We love the UK, it is a core market and will remain a core market for Santander.Punto [full stop], that’s it.”Speculation of its sale continued to swirl, but Santander finally put its money where its mouth is: agreeing to buy TSB from Spanish rival Sabadell in a deal that could eventually hit £2.9bn if the smaller bank’s profits meet forecasts.For Santander, the takeover will help fend off competition from the likes of Nationwide Building Society, which has been nipping at the bank’s heels after its own £2.
9bn acquisition of rival Virgin Money.It will add 5 million customers to its books, and make Santander the fourth-largest mortgage provider and third-largest bank in terms of personal current account deposits, behind Lloyds and NatWest.But for TSB, the future of its 5,000 staff and 175 branches is at stake.Santander will have to consider how to strip out duplicate roles and branches and whether to scrap the 215-year history old TSB brand, which could disappear from UK high streets after the takeover.Santander bosses told analysts on Tuesday night that they were aware of duplications, including “overlapping branches”.
Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionMeanwhile, unions have been holding urgent talks with TSB to try to get some clarity for staff, who have been subject to a tumultuous 12 years, marked by ownership upheavals and a disastrous IT meltdown that tarnished its reputation for years.Hived off from Lloyds Banking Group as part of state-aid rules after its £20.3bn government bailout in 2008, TSB again became a stand-alone brand and floated on the London Stock Exchange in 2014.It was delisted after its takeover by Spanish lender Sabadell in 2015, in a major cross border deal that the Treasury hailed as a “vote of confidence” in the UK.But the party did not last.
As soon as 2020, Sabadell began exploring a sale of TSB after the botched launch of a new IT system two years earlier prompted a tech meltdown, locking millions of customers out of their bank accounts.It caused a customer exodus, executive resignations, financial losses and a £48m fine from regulators.Sabadell eventually swallowed the losses, and was heartened by TSB’s recovery, even rebuffing a £1bn approach by the Co-operative Bank in 2022.It took a hostile bid for Sabadell by Spanish rival BBVA for the bank to reconsider a sale, with proceeds from TSB’s sale due to be distributed among shareholders who it hopes will see less benefit in agreeing to the takeover.But Sabadell’s loss could be Santander’s gain, and provide a timely boost for Reeves as she fights to keep the trust of the City courted on the election campaign trail amid a gloomy economic outlook.
UK watchdog threatens Ticketmaster with legal action over way Oasis tickets were sold
The UK competition watchdog has written to Ticketmaster threatening legal action over the way it sold more than 900,000 tickets for Oasis’s reunion tour, days before the start of what is expected to be the most popular, and profitable, run of gigs in British history.In March, the Competition and Markets Authority (CMA) published concerns that Ticketmaster may have misled fans, some of whom paid more than £350 for tickets with a face value of £150, in the way it priced tickets for the band’s comeback gigs when they went on sale last August.In response, Ticketmaster said it had made changes to “some aspects” of its ticket sales process. However, the CMA said that they were not sufficient to address its concerns.The CMA told Ticketmaster the voluntary undertakings it would accept to address its concerns
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Following my letter (23 June) complimenting the Royal Mail on delivering a letter from another reader to me with no house number, street or postcode, this week I received another addressed in exactly the same way from Peggy, who writes “Just checking whether Royal Mail can do it twice. Maybe first time was a fluke.” Evidently not. Perhaps it’s my fame as a beyond-“genius” Word Wheel player that’s helped locate me?Kevin WardQuorn, Leicestershire “What would British culture be like if Oasis had never existed?”, asks Dorian Lynskey (theguardian.com, 1 July)
UK financial watchdog expands bullying rules to 37,000 City firms
The UK’s financial watchdog is expanding bullying and harassment rules to more than 37,000 City firms, in an effort to crack down on “rolling bad apples” who avoid consequences by hopping from firm to firm.It means that “serious, substantiated cases of poor personal behaviour” by senior managers at a range of firms including hedge funds, insurers and pension firms will have to be reported to the Financial Conduct Authority (FCA), as well as future employers who are assessing whether new hires are fit and proper for the job.Previously, only banks were required to report bad behaviour to the watchdog. The rules will now apply to tens of thousands of other firms across the City that are bound by the so-called senior managers and certification regime (SM&CR) that is meant to hold senior bosses accountable for wrongdoing at their firms.The regulator said the expanded rules would help “prevent ‘rolling bad apples’ – people moving from firm to firm without appropriate action being taken or without past serious non-financial misconduct being disclosed”
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Three years ago Pascal Soriot received the ultimate accolade for turning around AstraZeneca – a knighthood for services to UK life sciences and leadership in the global response to the Covid pandemic.Soriot, who fended off a takeover from the US predator Pfizer in 2014, has grown AstraZeneca into Britain’s most valuable company, thanks to an astute eye for promising medicines and developing one of the first Covid vaccines.Now the 66-year-old trained equine vet is looking at his own US adventure. He has reportedly discussed moving AstraZeneca’s stock market listing, and perhaps even its corporate base, to the US.The company declined to comment on the bombshell report, but it sent shockwaves through Britain’s scientific community
Santander takeover of TSB is boost to Reeves as she fights to keep City’s trust
Santander’s takeover of TSB will be music to Rachel Reeves’ ears: sparing the under-pressure chancellor the potential embarrassment of having to explain why a major high street lender had given up on Britain.On Tuesday night, Spanish-owned Santander said it would buy TSB from its fellow Spanish owner, Sabadell, for £2.65bn, ending months of speculation over the future of the British bank – and reaffirming Santander’s commitment to the UK.Rumours had emerged in January that Santander UK could pull out of high street banking, potentially reversing gains made in stepping up its British presence with the acquisition of Abbey National two decades earlier. Bosses had started slashing 2,000 jobs months earlier, fuelling speculation that it was trying to create a leaner business that could lure potential suitors
UK bond yields rise sharply amid speculation over future of Rachel Reeves
UK government borrowing costs have risen sharply amid speculation over Rachel Reeves’s position as chancellor, as City investors warned Labour’s welfare U-turn had blown a multibillion-pound hole in the public finances.After Keir Starmer failed initially to give his full backing to a tearful chancellor at prime minister’s questions on Wednesday, the yield on 10-year UK government bonds, also known as gilts, was on course for the biggest jump in a day since Liz Truss was in No 10, while the pound slumped.The yield – in effect the interest rate – rose by as much as 0.2 percentage points to trade close to 4.7%, climbing by the most in one day since October 2022 when investor confidence in Britain remained shaken after Truss’s mini budget
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