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Abbey gets £1bn injection from Santander

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Date: Monday 13 Oct 2008

LONDON (ShareCast) - Spanish bank Santander injected £1bn into its UK subsidiary Abbey National, the mortgage lender, as part of its agreement to support the UK government’s bank bail-out scheme.

The group said the £1bn injection was in line with the commitment it made at the time of the acquisition of Alliance & Leicester.

Santander said the move will improve the capital ratio of its businesses in the UK, which includes Abbey and Alliance & Leicester.

Before the impact of the capital injection, it estimates the combined UK subsidiaries would have a Tier 1 ratio of around 8% at the end of 2008. The capital injection will improve the capital ratios by 1.25%.

"Santander does not intend to use the UK government's recapitalisation initiative with government funds, but strongly supports efforts to stabilise the operation of financial markets as shown by providing c. £1 billion of funding, at maturities between 3 and 6 months, to other UK banks last week," it added.

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