Santander / Abbey: acquisition objectives

:: The Santander / Abbey Deal ::
- acquisition objectives -

Santander / Abbey: acquisition objectives

The Abbey takeover created the first bank in the Euro-zone by market capitalization. Banco Santander saw the acquisition of Abbey National as an opportunity to:

  • Diversify and expand its business portfolio: The deal helped Santander to reduce its exposure to Latin America, decreasing revenue volatility and the group’s cost of capital. Furthermore, the acquisition transformed Santander into a global player. It becomed the 9th largest bank in the world with a highly diversified business portfolio both geographically and by business, operating in continental Europe (49 percent of its business), the UK (19 percent) and Latin America (32 percent). A pro of the Abbey acquisition was the small number of existing overlaps between both companies’ activities.
  • Enter the UK banking market, Europe’s largest and most profitable one (even if the most competitive) by utilizing Abbey’s existing presence and position in the United Kingdom to build on market share.
  • Create value through cost and revenue synergies: Abbey’s low efficiency levels provided a high potential for cost synergies by adopting Santander’s best practices so as to increase the efficiency in IT spending and customer service levels. Banco Santander aimed at building on the current expertise and capabilities of Abbey National while also contributing its own strengths in technology, retail banking and its unique business model to the mix. Santander was also confident in obtaining revenue synergies by expanding Abbey’s and its own product portfolio.

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