DEALTALK-Santander's play for Williams & Glyn raises capital concerns
(Repeats Wednesday story)
By Pamela Barbaglia, Sinead Cruise and Anjuli Davies
LONDON Jan 20 (Reuters) - Banco Santander's renewed interest in buying UK lender Williams & Glyn (IPO-WILL.L: Cotización) has stoked concerns it may need to step up asset sales and even raise cash to strike a deal some investors say it can ill afford.
A move for Williams & Glyn, held by the Royal Bank of Scotland, would help the euro zone's biggest lender poach valuable market share in Britain's competitive banking sector, but could cost as much as 2 billion pounds ($2.8 bln).
Santander, which already controls former UK building societies Abbey and Alliance & Leicester, is keen to expand in Britain to offset weakness in its domestic market, Spain, where analysts expect sharp rises in bad loans and volatile credit demand.
Several sources familiar with the bank's strategy say it is reviewing options to boost its financial firepower as it weighs a bid for Williams & Glyn, so it can bolster its balance sheet and avoid upsetting shareholders already spooked by its capital position relative to European rivals.
The Spanish bank is working with UBS on a new bid for Williams & Glyn after previous talks with RBS fell apart in 2012 amid concerns about the lender's standalone technology platform, three sources with direct knowledge of the matter said.
"The fact they're considering a bid for Williams & Glyn is, on paper, disconcerting," said Xavier VanHove, a partner and fund manager at THS Partners, an investor in Santander.
"If it is part of an empire-building campaign, then we would have serious issues with it." Continuación...