Santander Plans €4 Billion Sale Leaseback of Property Portfolio in Spain

The Guardian - June 14, 2007

The Spanish bank Santander, a member of the Royal Bank of Scotland-led consortium bidding for ABN Amro, is preparing to sell property to raise €4bn (£2.7bn) to help fund the record-breaking £48bn takeover attempt of the Dutch bank.

As the Spanish bank lined up its property assets for the market, Barclays was searching for ways to add a cash sweetener to its agreed, but lower, bid for ABN Amro. Barclays, whose offer has the recommendation of the Dutch bank's board, is funding its deal entirely in shares but is expected to have to increase its bid to be able to see off the RBS consortium.

The RBS consortium has structured its hostile offer as 79% cash and the rest in RBS shares. Santander and the Dutch-Belgian financial group Fortis are providing much of the cash. By selling off 44 buildings throughout Spain, 1,200 offices and its new headquarters in Boadilla on the outskirts of Madrid, Santander is beginning the process of raising the €20bn of cash needed to fulfil its part of the deal.

The Spanish bank is thought to have been considering a sale of the property assets before the ABN Amro bid. Spanish property prices have been booming and selling the property would unleash gains for Santander, which intends to lease back the properties it sells. The one property excluded from the deal is the official headquarters in Paseo de Pereda where Santander was founded 150 years ago.

It is not certain that Santander will actually need the cash to fund a bid for ABN Amro as the circumstances surrounding the offer are very complicated. Sphere: Related Content