Alliance and Leicester to be sold
Britain’s 7th largest bank, Alliance & Leicester, is to be bought by Spanish bank Banco Santander, it has been announced. This is likely to mean an A&L merger with Abbey, which Santander bought in 2004.
A&L has been subject to persistent rumours about it’s exposure to bad debt in the current credit crunch crisis, and has seen profits fall by 30% over the last year. Abbey too has been hit by the credit squeeze, and has reduced the number of mortgages it offers. The merger, say analysts, is likely to create a stronger and more profitable bank, and also shows that the Spanish owners have confidence in the long term future of the UK housing market.
As far as banking is concerned, savers may be the main beneficiaries, as a bigger bank will have more assets and access to credit, and thus can afford to offer higher interest rates to it’s depositers.