Spain's SCH plans to cut around 3,000 jobs at takeover target Abbey National to meet its goal of reducing costs by 450 million euros (302 million pounds) at the bank within three years.
At a meeting between Santander Central Hispano Chairman Emilio Botin and Abbey's staff union, SCH said it would safeguard staff pensions and offer 100 SCH shares (currently worth about 800 euros) to each Abbey employee if the takeover were successful, according to an SCH statement on Monday.
There would also be a staff share scheme designed to be as tax efficient as possible for Abbey's 26,000 employees, informs Reuters.
According to Bloomberg, Botin may face a rival offer for Abbey from HBOS Plc, Britain's fourth-biggest lender. HBOS would have to eliminate as many as 9,000 jobs at Abbey because it already has branches in the U.K., the Independent newspaper reported on Saturday.
Santander may have to cut as many as 5,000 jobs "to achieve the efficiencies that Santander has at home," said Sheila Garrard, an analyst at Commerzbank AG who rates Santander shares "equal- weight." "The 3,000 would be for the first three years, and then more cuts could follow."
The Spanish lender would need to eliminate 8,000 jobs at Abbey to meet the pledged savings, Albert Coll and Ronit Ghose, analysts at Citigroup's Smith Barney, said in an Aug. 11 report. The 450 million-euro goal is for the third year after the takeover is completed.
It was reported at the weekend that Santander would drop its offer for Abbey if rival bids resulted in a drawn-out competition investigation, because it feared a lengthy inquiry would create uncertainty and damage Abbey's business. The bank has indicated it would let its bid lapse in the event of a six-month competition investigation - giving Abbey shareholders a stark choice between a certain takeover by Santander and a possible higher bid from a British rival. Santander's deal will lapse if not completed by March 31, reports Guardian.
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