Santander snubs UK shareholders

Santander took over the Bradford & Bingley's savers in September

The giant Spanish bank Santander has excluded 1.8 million UK shareholders from taking part in a new share issue.

The bank, which owns the Abbey and Alliance & Leicester, said this was due to logistical problems.

Its share issue in Spain is aimed at raising a further 7.2bn euros (£5.9bn) from its shareholders.

It has written to its UK private investors, saying they will instead receive cash from the sale of their share entitlement to other investors.

"All shareholders should be treated equally and this is a very dangerous precedent," said Roger Lawson, of the UK Shareholders Association.

The bank's UK private investors hold on average just 100 shares, which are currently worth about 5.40 euros each.

Takeovers

In September Santander agreed to take over the savings accounts of the Bradford & Bingley as part of the UK government's attempts to stop that bank collapsing.

The overwhelming majority of its private investors own their shares because they were former investors in either the Abbey, which Santander took overtaken over in 2004, or the Alliance & Leicester, whose takeover by the Spanish bank was finalised in October this year.

Under Spanish law, rights issues - selling new shares to existing investors - have a short 15-day timetable, which is far shorter than that normally implemented by UK companies seeking to raise new funds in this way.

Santander said this was not long enough to contact the UK shareholders via the bank's nominee shareholder service, which holds their shares.

They will instead be offered the chance to buy shares later, but at a price that has yet to be specified.

When the UK shareholders' rights to buy the new shares are sold in the stock market, Santander will pay any charges levied by the nominee.

But other stockbroking costs and currency charges will have to be paid for out of the proceeds of the sale, before the shareholders receive their cash.