Fears for jobs at A&L after takeover by Abbey owners
Jul 15 2008 by Karen Dent, The Journal
FORMER building societies Abbey and Alliance & Leicester are set to merge in a £1.26bn deal. Spanish banking company Santander, which already owns Abbey, plans to merge the two into a business with 959 UK branches and a share of more than 8% of the savings and personal loans market. It has agreed the takeover with A&L’s board and the deal should be completed in October as long as no rival offer emerges.
Santander will also pump around £1bn into A&L to shore up the group’s finances, which have been rocked by the credit crunch.
A&L’s acting chairman Roy Brown said: “The board is acutely aware of the significant external risks presented by the deterioration in economic conditions and the continuing turbulence in the financial markets.
“Against that background, the proposal from Santander represents value for shareholders, and the combination of A&L with Santander’s UK operations is an excellent fit.”
However, the bank was unable to rule out jobs losses as a result of the deal.
Chief executive David Bennett said: “I can’t say to you that there won’t be job losses but this deal is not predicated on job losses.”
But the Communication Workers’ Union (CWU) expressed concern for A&L’s staff.
Andy Kerr, deputy general secretary, said: “This is potentially a very serious situation for CWU members in Alliance and Leicester. A takeover by any company already active in the UK could mean a potential large number of job losses among the 8,000 employees of A&L.
“Staff at A&L deserve to have answers about their future and we urge the company to be up-front about their intentions.”
He also criticised the way staff were informed about the proposed deal.
“Employees have heard the news from customers and on the news before hearing it from their employer, which shows a lack of consideration for affected staff,” he said.
“We will be asking for a meeting with the company to seek assurances about our members’ job security and also an urgent statement about the potential takeover itself.”
Santander – the world’s sixth biggest bank by market capitalisation and the biggest in Europe – bought Abbey in 2004. It expects to make annual savings of more than £180m by the end of 2011 through the combination of back-office functions.
David Cumming, head of UK equities at Standard Life Investments, which holds a 2.35% stake in A&L, said: “They are acquiring A&L on giveaway terms.”
