Santander Central Hispano SA, the largest bank in Spain and Latin America, said Monday that it had agreed to buy Abbey National PLC of London for $15.2 billion in Europe’s biggest-ever cross-border banking takeover.
Abbey is the second-largest mortgage bank in Europe’s biggest consumer credit market. It returned to profit in the first half after $3.4 billion of losses in the past two years.
Santander has been buying consumer lending businesses in Europe to help meet chairman Emilio Botin’s forecast of a 15% increase in earnings this year and to counter two years of falling profit from Latin America.
Abbey’s CEO, Luqman Arnold, who took over in October 2002, has been trying to turn it around after a failed expansion into corporate lending in the late 1990s. On Monday it reported first-half net income of $390 million; it had lost $267 million in the year-earlier period.
It has forecast a 2004 profit after selling money-losing investments in bonds, aircraft leases, and loans. It said this month that it would not need to set aside more money at its life insurance units, after $2.6 billion of provisions in three years.
Abbey has about 11% of the U.K.’s $1.37 trillion mortgage market, one of the fastest growing in Europe.
Mortgage lending in Britain is climbing about 15% annually, according to the Council of Mortgage Lenders. Santander, whose namesake home city is on Spain’s northern coast, is expanding in retail banking in Europe. Mr. Botin told shareholders in June that he expects net income this year to exceed $3.6 billion, 38% more than last year.
On Monday the company reported second-quarter net income of $1.41 billion, up 41% from a year earlier.
Buying Abbey would make Santander the 10th-largest bank by market capitalization, Santander said. Mr. Botin said as recently as June that he was aiming for it to join the top 10.
