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UK Money
What The Alliance &
Leicester Takeover Actually Means
Banco Santander, the
Spanish bank that owns Abbey, has agreed to
buy Alliance & Leicester. The move has been
unanimously approved by shareholders, and
will mean that Abbey and Alliance &
Leicester will merge in the slightly longer
term. Both Abbey and Alliance & Leicester
have been affected by the credit crunch,
with the latter announcing that its half
year profits had been completely wiped out,
and the takeover ensures the future
stability of the companies.
The stockholders might be
satisfied but what does it mean to the
customers of the banks involved? Alliance &
Leicester is, after all, Britain’s seventh
biggest bank and has over 7,000 employees
making it quite an attractive proposition
for a takeover.
If you currently have an
Alliance & Leicester mortgage you will
probably not notice any difference with your
mortgage. All your monthly repayments will
proceed as normal in exactly the same way,
and just about the only major difference is
that the paper upon which your
correspondence is printed may well bear
different branding.
Overall the outlook is
relatively bright as Santander would not
have made the approach to become involved in
the British housing market without
confidence that there is money to be made in
that area. Alliance & Leicester alone
carries enormous liabilities, and the
Spanish giant would not be willing to take
on that risk without a clear plan for the
future.
Eventually, as is the
promise with the merger of HBOS and Llloyds
TSB, there will be a greater range of offers
and products available to customers of
Alliance & Leicester. In partnership with
Santander the bank will have a larger base,
which means that it can afford to offer
rates that make it smaller profits each time
– and therefore represent better value for
customers.
If you are a saver with
Alliance & Leicester at the moment, you
should not experience any particular changes
either. In the long term, as mentioned
above, you may find the opportunity to get
better rates, but what those offers will
look like is anyone's guess at the moment.
The major beneficiaries
of the merger could well be the
shareholders, as the share price of Alliance
& Leicester has fallen significantly
recently, and Santander shares are almost
certainly going to be a lot more stable. The
major loser in the takeover may well be the
staff, as Santander is almost certainly
going to merge some branches and
administrative functions across Abbey and
Alliance & Leicester in order to save money.
Again no one knows how many jobs will be
cut, if at all.
For the future then, for
holders of mortgages or
bank accounts with Alliance & Leicester
the future looks bright. The bank was
struggling with the credit crunch, but as
part of the larger Santander organisation it
now looks much steadier, and in a position
to offer better deals to it’s customers in
the future. Even if you are not a customer
with the bank currently, it might well be
worth your while to keep an eye on the deals
they offer in the not too distant future.
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